RBC Investor & Treasury Services
Survey: Equity Returns Propel Canadian Pensions in 2012
Toronto, January 29, 2013 — Global equity and real estate
returns boosted Canadian pension plans despite fourth quarter
volatility, according to the latest survey from RBC Investor
Services, part of Royal Bank of Canada's (RY on TSX and NYSE)
Investor & Treasury Services segment.
Within the $410 billion RBC Investor & Treasury Services
All Plan universe - the industry's most comprehensive universe
of Canadian pension plans - Canadian defined benefit (DB)
pensions gained 2.5 per cent in the quarter ending December
31, 2012, compared to 3.2 per cent in the third quarter. The
median 2012 return for Canadian DB plans was 9.4 per cent.
"With overall 2012 returns approaching double digits,
Canadian defined benefit pension plans were able to breathe
a little easier even with only modest returns in the fourth
quarter," said Scott MacDonald, Head, Pensions, Insurance,
and Sovereign Wealth Strategy for RBC Investor Services. "Continued
stimulus by central banks in Europe, Japan and the U.S. offered
hope for the global economy, while here in Canada lower global
demand for commodities dampened Canadian equity returns. Despite
this weakness, other contributing sectors finished the year
strong, helping Canadian equity performance for the quarter
to remain positive."
Canadian equities returned 1.7 per cent in the fourth quarter,
bringing full year S&P/TSX performance up to 7.2 per cent.
Eight out of 10 sectors in the S&P/TSX Composite had positive
gains in the fourth quarter, with consumer staples and information
technology up 9.2 per cent and 7.3 per cent respectively.
Financials continued to be a primary Canadian equity driver
as the sector rose 6.3 per cent in the quarter, ending the
year up 17.6 per cent.
Canadian pensions' Canadian equity holdings returned 3.1
per cent for the quarter, outperforming the S&P/TSX Composite
by 1.4 per cent as they were underweight in materials and
slightly overweight in consumer staples and information technology.
Despite concerns over the European crisis, the U.S. election
and weakening corporate earnings growth, Canadian dollar returns
for the MSCI World was 3.7% for the quarter and 13.3 per cent
on the year. Canadian Pensions outperformed the benchmark
MSCI World index by 0.8 per cent in the fourth quarter and
1.4 per cent for 2012.
The real estate asset class also gave Canadian pensions a
lift, delivering double digit returns in 2012.
Canadian DB plans matched the benchmark DEX Universe Bond
Index, returning 0.3 per cent for the fourth quarter but were
able to outperform the benchmark on the year by 0.9 per cent.
Added MacDonald: "Within the DEX Universe index, the
corporate segment continued to outperform the government segment
as managers were confident enough to take on additional risk
for the potential yield."
About RBC Investor & Treasury
RBC Investor & Treasury Services, part of Royal Bank
of Canada (RY on TSX and NYSE), is a specialist provider of
custody, payments and treasury services for financial and
other institutional investors worldwide. The Investor &
Treasury Services segment is comprised of three businesses:
Global Financial Institutions, Investor Services and Treasury
Services. Active in 15 markets globally, RBC Investor &
Treasury Services provides custodial, advisory, financing
and other services to safeguard clients' assets, maximize
liquidity and manage risk in multiple jurisdictions. RBC Investor
& Treasury Services is ranked among the world's top 10
global custodians, with USD 2.9 trillion (CAD 2.8 trillion)
in client assets under administration.
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