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The global economic standstill created by Covid-19 containment measures and subsequent market volatility caused Canadian defined-benefit (DB) pension plans to nose dive in the first quarter of 2020, according to new data from RBC Investor & Treasury Services (RBC I&TS).

RBC I&TS reported that its DB pension plan index posted a median return of −7.1% for the quarter, down from 2% the previous quarter — the steepest decline since Q3 2008 (−8.2%).

“It has been an exceptionally difficult period for Canadian pension plans to navigate, as the markets have been experiencing an unprecedented amount of volatility across asset classes,” said David Linds, head of Canadian asset servicing at RBC I&TS, in a release.

Canadian equities significantly underperformed, with the S&P/TSX Composite posting a return of −20.9% for the quarter, compared to global equity returns of −13.3% (MSCI World Index).

While the impact of the coronavirus pandemic was the primary cause of the drop in Canadian equities, the natural-gas pipeline disputes and the Russia–Saudi Arabia oil price war were contributing factors, RBC I&TS noted.

The Canadian dollar dropped against its U.S. counterpart, allowing plans with unhedged exposure to non-Canadian equities to be somewhat sheltered from local currency losses, it said.

Fixed income also provided plans with some shelter from equity losses, with the FTSE Canada Universe Bond index posting a quarterly return of 1.6%.

There was a noticeable flight to safety as investors sold off riskier investments in high yield and embraced government bonds, RBC I&TS said.