Canadian defined benefits plans had a solid Q3 performance, gaining 3.2 percent at the median, according to Northern Trust Canada Universe.
The Northern Trust Canada Universe tracks the performance of Canadian institutional investment plans that subscribe to performance measurement services as part of Northern Trust’s asset service offerings.
Data showed that equity markets navigated through pockets of volatility, maintaining resilience and closing the quarter in positive territory.
Northern Trust explained that financial markets appeared to “shrug off fears perpetuated by the coronavirus pandemic and recent sell-off in technology stocks, and focus on progress in vaccine development and hopes for further stimulus relief”.
Policymakers around the world continued to deploy the financial tools necessary in an effort to bridge economic gaps as global economies slowly regained strength while transitioning through the reopening phase, according to the bank.
Canadian equities, as measured by the S&P/TSX composite index, generated a return of 4.7 percent for the quarter, with all sectors posting gains with the exception of the healthcare and energy sectors.
It was also noted that US equities continued to extend solid gains with the S&P 500 index recording a new all-time high in September and generated a robust 6.8 percent in Canadian Dollar (CAD) for the quarter.
The majority of sectors posted healthy gains, while the real estate sector remained flat and the energy sector retreating as a result of weaker oil prices.
Elsewhere, international developed markets, as measured by the MSCI EAFE index, posted a 2.9 percent return in CAD for the quarter. With the exception of energy and financials, all sectors rose during the quarter.
The MSCI emerging markets index produced a solid result with a 7.6 percent return in CAD during Q3. Consumer discretionary and information technology sectors led the way with attractive double-digit returns, while utilities, energy and financials remained the weakest segments.
Northern Trust explained that the Canadian economy showed signs of progress as witnessed by an improvement in economic data, including monthly GDP growth.
Katie Pries, president and CEO of Northern Trust Canada, said: “The global pandemic has undoubtedly accelerated the pace of change for many defined benefit pension plans over the course of recent months; namely in the form of financial, regulatory as well as technology transformation.”
Pries added: “As pension plan sponsors embrace this evolution of change and the adaptation to a virtual work environment, they remain vigilant on preserving plan assets while generating investment results supportive of long-term sustainability and growth.”
.jpg)