Pensions post lacklustre gains: RBC Dexia

Canadian pension plans ended the year barely in positive territory, thanks to an impromptu October market rally that helped lift retirement assets by 4.2% in the fourth quarter, according to a survey by RBC Dexia Investor Services.

Canadian pensions earned just 0.5% for the year ended Dec. 31, 2011. “It’s been a tumultuous year for global markets,” said Don McDougall, director of advisory services with RBC Dexia. “We had a natural disaster in Japan, geopolitical tensions in the Middle East, a stubborn U.S. recovery with its ensuing political backlash, sputtering Chinese growth and the ever-lingering European debt crisis—most pensions will be pleased its over.”

Canadian equity was the hardest hit asset class during the year as the S&P TSX Composite Index dropped 8.7%. “Weakness in the three largest sectors—materials (down 21%), energy (down 10%) and financials (down 3%)—accounted for the bulk of the market’s decline,” explained McDougall. “Pensions trailed the S&P TSX Composite by 0.9% for the year despite outperforming the benchmark by 0.6% in the December quarter.”

Foreign equities also moved backwards during the year, losing 4.2% while underperforming the MSCI World Index by 1%.

Bonds provided the needed support, advancing 9.8% over the last 12 months on the heels of a late-year rally. “Fixed income strength continued to come from declining longer-term bond yields as the DEX Long Term Bond Index (up 18.1%) had its best calendar year result since 1997,” said McDougall.

This article was originally posted on BenefitsCanada.com.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.