Canadian pension assets remained unchanged during the second quarter of 2013, as a spike in interest rates in June negated advances in April and May, according to the latest survey from RBC Investor & Treasury Services.
The survey found that defined-benefit (DB) pensions returned 0% for the quarter ending June 30, keeping year-to-date results at 4.5%.
“Market volatility returned in June following the Fed’s statements regarding its commitment to quantitative easing,” said Scott MacDonald, head of Pension Segment Development for RBC Investor & Treasury Services. “While all DB plans benefit from rising long term bond yields as pension liabilities are reduced, those with risk mitigating liability driven investment strategies were the hardest hit during the quarter.”
Bonds had their largest three-month decline since 1994, losing 2.5% in the quarter and 1.7% over six months. MacDonald noted that long-term bonds were most affected. Canadian equities also lost ground within pension plans, declining 1.2% compared to the S&P/TSX Composite, which was down 4.1% in the quarter.
“The decline in the materials sector and mining stocks in particular continued to be the key factor affecting performance this quarter … most pensions stayed in positive territory despite the market’s loss by remaining underexposed to the sector,” said MacDonald.
Foreign stocks provided the needed support this quarter, gaining 4.7%, mostly due to continued positive performance in the U.S. equities market.
RBC Survey Finds Canadian Pension Assets Flat
Canadian pension assets remained unchanged during the second quarter of 2013, as a spike in interest rates in June negated advances in April and May, according to the latest survey from RBC Investor & Treasury Services.