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Canadian pension returns post four consecutive quarters of gains: RBC Investor & Treasury Services

Q1 2017 returns of 2.9 per cent build on strong close to 2016

 

TORONTO, May 15, 2017 - Building on a strong 2016 annual return of 6.8 per cent, Canadian defined benefit pension plans upheld the positive growth trend with Q1 2017 returns of 2.9 per cent, according to the $650 billion RBC Investor & Treasury Services All Plan Universe, the industry’s most comprehensive universe of Canadian pension plans. This marks the fourth straight quarter of growth for Canadian pension plans.

“Canadian pension plan returns, led by strength in Canadian and global equities, are off to a good start in 2017; however vigilance is still required,” said James Rausch, Head of Client Coverage, Canada, RBC Investor & Treasury Services. “While ongoing business investment in Canada could spur growth, asset managers will undoubtedly be focusing on maintaining a diversified portfolio and actively managing their risk exposure in the period ahead given evolving macro-economic and political forces around the world.”

Positive global economic conditions in Q1 2017 helped lift global equities in delivering a return of 6.2 per cent, up from 3.0 per cent in Q4 2016. The MSCI World Index reflected a similar trend, returning 5.8 per cent for Q1 2017, up from 3.9 per cent in Q4 2016.

Canadian equity returns retreated slightly quarter-over-quarter, returning 2.3 percent in Q1 2017, down from 5.7 per cent in Q4 2016. The TSX Composite Index followed a similar course, gaining 2.4 per cent in Q1 2017 yet down from 4.5 per cent in Q1 2016, primarily due to weakness in the energy sector at the beginning of the year.

Canadian fixed income assets rebounded in Q1 2017, posting a return of 1.4 per cent, compared to a Q4 2016 loss of -3.4 per cent. The FTSE TMX Universe Canadian bond index also returned to positive territory, posting a Q1 2017 gain of 1.2 per cent. The Index declined by 3.4 per cent in Q4 2016. The Canadian bond market remained stable against a number of national and international events, including the delivery of the Canadian federal budget, a U.S. interest rate hike and continuing Brexit developments.

The foreign exchange market saw the U.S. dollar depreciate against the Canadian dollar in Q1 2017, losing -0.6 per cent compared to a Q4 2016 gain of 2.0 per cent. Federal Reserve rate hikes and the cautious views of the Bank of Canada may continue to impact the currency pair.

HISTORIC PERFORMANCE

Period

Return (%)

Period

Return (%)

Q1 2017

2.9

Q4 2014

2.7

Q4 2016

0.5

Q3 2014

1.1

Q3 2016

4.2

Q2 2014

3.0

Q2 2016

2.9

Q1 2014

4.8

Q1 2016

0.0

Q4 2013

6.1

Q4 2015

3.1

Q3 2013

3.6

Q3 2015

-2.0

Q2 2013

0.0

Q2 2015

-1.6

Q1 2013

4.4

Q1 2015

6.6

Q4 2012

2.5

 

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 over $650 billion in 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 services for financial and other institutional investors worldwide. We serve clients from 19 countries across North America, Europe, Asia and Australia, delivering services to safeguard client assets and maximize liquidity. Rated by our clients as the #1 global custodian for six consecutive years (Global Custody Survey, Global Investor ISF, 2011 to 2016), RBC I&TS is trusted with CAD 3.8 trillion in client assets under administration as at January 31, 2017.

About RBC
Royal Bank of Canada is Canada’s largest bank, and one of the largest banks in the world, based on market capitalization. We are one of North America’s leading diversified financial services companies, and provide personal and commercial banking, wealth management, insurance, investor services and capital markets products and services on a global basis. We have over 80,000 full- and part-time employees who serve more than 16 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 35 other countries. For more information, please visit www.rbc.com/.‎

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For more information, contact:

Briana D’Archi
+1 416-955-5658
briana.darchi@rbc.com

Adam Lister
+44 (0)20 7653 4978
adam.lister@rbc.com

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 & Treasury Services operates primarily through the following 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.

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