- Q4 2018 returns lose -3.5 per cent
- The first quarter with a loss since Q3 2015
TORONTO, Feb. 5, 2019 /CNW/ - Canadian defined benefit
pension plans ended 2018 in negative territory, with an annual
return of -0.7 per cent, reversing gains from the previous three
quarters this year, according to the RBC Investor & Treasury
Services All Plan Universe. Plan returns posted a Q4 2018 return of
-3.5 per cent compared to a 0.1 per cent gain in Q3 2018. The
annual return in 2017 was 9.7 per cent.
Canadian equities and the TSX Composite Index were hit hard in
Q4 2018, returning -10.6 per cent, and -10.1 per cent respectively.
Both Canadian equities and the TSX Composite Index returned -8.9
per cent in 2018. Both posted annual gains in 2017: 9.0 per cent
for Canadian equities and 9.1 per cent for the TSX Composite Index.
Higher interest rates and lower oil prices contributed to the loss
while eight of the 11 sectors on the TSX also posted losses for the
year.
QUOTE:
"Geopolitical and economic uncertainty
reverberated through the market all year. Trade wars, rate hikes,
oil prices, and Brexit helped contribute to lower earnings
expectations which drove returns sharply lower in Q4 and for the
year. With the Fed pausing on rate hikes as well as trade
negotiations between the U.S. and China showing progress in January, markets
have started the year strong but investors need to remain vigilant
as we are approaching the end of the market cycle and volatility is
unlikely to go away."
- Ryan Silva, Director, Head of
Pension and Insurance Segments, Global Client Coverage, RBC
Investor & Treasury Services
RBC I&TS Defined Benefit Pension Plan Survey
Results
In addition, a recent RBC Investor & Treasury
Services survey of Canadian defined benefit pension plan sponsors
showed that economic and geopolitical uncertainty remains a top
concern, behind aligning future liabilities with assets and a low
interest rate environment. The survey, Embracing Change, also
revealed that approximately 40 per cent of respondents are
satisfied with the sustainability of their plans and almost 90 per
cent are confident to extremely confident of their plan's ability
to meet its ongoing liabilities.
ADDITIONAL RESULTS
- Canadian Fixed Income returns rebounded into positive territory
in Q4 in the RBC All Plan Universe, returning 1.8 per cent, vs. Q3
2018 returns of -1.5 per cent. Annual returns also finished in the
black at 1.2 per cent.
- The FTSE TMX Universe Canadian Bond Index returned 1.8 percent
in Q4 2018 compared to -1.0 in Q3 2018. The Index returned 1.4 per
cent in 2018.
- Like their Canadian counterparts, global equities in the RBC
All Plan Universe posted declines during the year: -1.3 per cent
and quarter: -7.8 per cent. (weakness in the Canadian Dollar
tempered some of the local currency losses in that asset class for
unhedged plans).
- The MSCI World Index's returns declined -0.5 per cent for the
year and -8.5 per cent during Q4 2018.
- Emerging markets outperformed developed markets over the
quarter, returning -2.2 per cent vs. -8.5 per cent, but trailed
over the year returning -6.9 per cent vs. -0.5 per cent.
- Canadian defined benefit pension plans last reported a
quarterly return loss in Q3 2015.
HISTORIC PERFORMANCE
Period
|
Return
(%)
|
Period
|
Return
(%)
|
Q4 2018
|
-3.5
|
Q1 2017
|
2.9
|
Q3 2018
|
0.1
|
Q4 2016
|
0.5
|
Q2 2018
|
2.2
|
Q3 2016
|
4.2
|
Q1 2018
|
0.2
|
Q2 2016
|
2.9
|
Q4 2017
|
4.4
|
Q1 2016
|
0.0.
|
Q3 2017
|
0.4
|
Q4 2015
|
3.1
|
Q2 2017
|
1.4
|
Q3 2015
|
-2.0
|
About the RBC Investor & Treasury Services All Plan
Universe
For the past 30 years, RBC Investor & Treasury
Services (RBC I&TS) has managed one of the industry's
largest and most comprehensive universes of Canadian pension plans.
The "All Plan Universe" currently tracks the performance and asset
allocation of a cross-section of assets under management across
Canadian defined benefit (DB) pension plans, and is a
widely-recognized performance benchmark indicator. The RBC Investor
& Treasury Services "All Plan Universe" is produced by RBC
I&TS' Risk & Investment Analytics (R&IA) service.
R&IA work in partnership with best-in-class technology to
deliver independent and cost effective solutions designed to help
institutional investor clients monitor investment decisions,
optimize performance, reduce costs, mitigate risk and increase
governance capability.
About RBC Investor & Treasury Services
RBC
Investor & Treasury Services (RBC I&TS) is a
specialist provider of asset services, custody, payments and
treasury and market services for financial and other institutional
investors worldwide, with over 4,500 employees in 17 countries
across North America, Europe, Asia
and Australia. We deliver services
which safeguard client assets, underpinned by client-centric
digital solutions which continue to be enhanced and evolved in line
with our clients' changing needs. Trusted with CAD 4.3 trillion in client assets under
administration as at November 28,
2018, RBC I&TS has been rated by our clients as the #1
global custodian for eight consecutive years and is a financially
strong partner with among the highest credit ratings globally.
RBC Investor &
Treasury Services™ is a global brand name and is part of Royal Bank
of Canada. RBC Investor & Treasury Services is a specialist
provider of asset servicing, custody, payments and treasury
services for financial and other institutional investors worldwide.
RBC Investor Services™ operates through the following primary
operating companies: Royal Bank of Canada, RBC Investor Services
Trust and RBC Investor Services Bank S.A., and their branches and
affiliates. These materials are provided by RBC Investor &
Treasury Services (RBC I&TS) for general information purposes
only. RBC I&TS makes no representation or warranties and
accepts no responsibility or liability of any kind for their
accuracy, reliability or completeness or for any action taken, or
results obtained, from the use of the materials. Readers should be
aware that the content of these materials should not be regarded as
legal, accounting, investment, financial, or other professional
advice, nor is it intended for such use. ® / ™ Trademarks of Royal
Bank of Canada. Used under licence. rbcits.com
|
SOURCE RBC