RBCIS highlights a 3.6% median return for DB pension plans, with a notable rise in Canadian equities
RBC Investor Services (RBCIS) recently released a report indicating a median return of 3.6 percent for their defined benefit (DB) pension plans in the first quarter of 2024.
The report detailed a significant 6.8 percent rise in Canadian equities for client plans, which closely mirrored the TSX Composite Index’s 6.6 percent increase. The energy and industrials sectors led this growth with advances of 13.1 percent and 11.1 percent, respectively.
In comparison, foreign equities for client plans yielded a 9.8 percent gain, slightly trailing the MSCI World Index, which returned 11.7 percent.
Isabelle Tremblay, senior director of Asset Owner Solutions at RBCIS, highlighted the influence of AI-exposed stocks on market performance.
According to Tremblay, growth-oriented equities, particularly those in the communication services, information technology, and financial sectors, significantly outperformed, posting returns of 15.9 percent, 15.2 percent, and 13.4 percent, respectively.
Tremblay noted the distinct impact of Canadian fixed income allocations on the overall portfolio performance, pointing to a decline of -1.9 percent in this sector.
This downturn reflected broader market trends as evidenced by the FTSE Canada Universe Bond Index, which fell by -1.2 percent.
Furthermore, the FTSE Canada Long Term Bond Index experienced a sharper drop of -3.6 percent, contrasting with a slight increase of +0.3 percent in the FTSE Canada Short Term Bond Index, amid rising yields.
Concluding her analysis, Tremblay stressed the critical role of strategic planning and risk management in current market conditions. She underscored that informed decision-making, and a proactive approach are essential for capitalizing on emerging opportunities and countering potential threats.
Tremblay also mentioned that asset managers are now increasingly focusing on diversification strategies and technological advancements to effectively navigate the evolving financial landscape.
