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Rebounding Canadian equities drive Canadian pension returns higher in third quarter: RBC Investor & Treasury Services

Q3 total returns gain 0.4 per cent

TORONTO, November 8, 2017 - Canadian defined benefit pension plans, buoyed by rebounding Canadian  equity returns, posted Q3 2017 returns of 0.4 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 sixth straight quarter of growth for Canadian pension plans. Q2 total returns posted a 1.4 per cent gain.

Canadian equity returns reverted to positive territory with returns of 3.8 per cent in Q3 2017, compared with -1.9 in Q2 2017. The TSX Composite Index also returned to the black, posting returns of 3.7 per cent, up from -1.6 per cent in Q2 2017. A year ago, Canadian equities posted strong returns of 6.7 per cent while the TSX Composite Index posted a return of 5.5 per cent. The resources, materials and energy sectors helped fuel the 2016 gains.

Canadian Fixed Income returns moved lower, posting a 2 per cent loss this quarter compared to a 1.4 per cent gain in Q2 2017. The FTSE TMX Universe Canadian Bond Index retreated -1.8 per cent in Q3 2017, compared to a 1.1 per cent gain in Q2 2017.

“The energy sector posted stronger returns in September due to a rebound in oil prices which helped lift Canadian equities, while the bond market slipped into negative territory after strong Canadian economic growth led the Bank of Canada to raise interest rates for the first time in seven years,” said James Rausch, Head of Client Coverage, Canada, RBC Investor & Treasury Services. “The rate increase helped boost the financial services sector as well as drive short-term bond yields and the Canadian dollar higher. These developments will be taken into account by Canadian pension fund managers as they assess their asset allocation and look ahead to Q4 and year-end returns.”

Geopolitical activity continued to reverberate through global equity markets, which posted 1.2 per cent returns in Q3 2017, down from 2.3 per cent in Q2 2017 and 6.7 per cent a year ago. Comparatively, the MSCI World Index gained 1 per cent in Q3 2017, a decline from 1.3 per cent in Q2 2017.

The U.S. dollar continued to slide against the Canadian dollar, falling further into the red at -3.7 per cent, down from -2.6 per cent in Q2 2017.

HISTORIC PERFORMANCE

Period Return (%) Period Return (%)

Q3 2017

0.4

Q2 2015

-1.6

Q2 2017

1.4

Q1 2015

6.6

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


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 is a specialist provider of asset services, custody, payments and treasury services for financial and other institutional investors worldwide. We serve clients from 17 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 seven consecutive years (Global Custody Survey, Global Investor ISF, 2011 to 2017), RBC I&TS is trusted with CAD 4.2 trillion in client assets under administration as at July 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 approximately 81,000 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 rbc.com.‎

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For more information, please 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 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.