Canadian defined benefit pension plans remained in positive territory in Q1 2018, according to RBC Investor & Treasury Services (RBC I&TS) All Plan Universe.
Q1 2018 returns stood at 0.2 percent, down from Q4 2017 returns of 4.4 percent. Pension returns came in at 2.9 percent in Q1 2017.
RBC I&TS reported Canadian equities were greatly impacted during the quarter, posting a minus 3.9 percent loss, compared to gains of 4.2 percent in Q4 last year.
Global equities retreated, returning 2 percent in Q1 2018, a decrease from 6.1 percent a quarter earlier.
The North American Free Trade Agreement negotiations and potential interest rate hikes impacted additional returns, RBC I&TS reported.
Canadian fixed income assets posted a small return of 0.1 percent in Q1 2018, compared to 2.2 percent in Q4 2017.
The Canadian dollar was the worst performing major currency during Q1 2018. In this time, the US dollar appreciated versus the Canadian dollar by 2.9 percent due to the uncertainty around trade talks and its impact on the Canadian economy and its monetary policy.
Ryan Silva, director and head of pension and insurance segments and global client coverage at RBC Investor & Treasury Services, said: “The Q1 2018 was full of instability and volatility, with Canadian equities taking the biggest hit.”
He added: “Geo-political concerns, coupled with international trade and interest rate anxieties also impacted global equity returns. Asset managers should remain vigilant to ongoing volatility for the remainder of the year, and maintain a diversified portfolio to actively manage their risk exposure.”
