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Canadian pension returns post slight gain in Q1 2018: RBC Investor & Treasury Services

Q1 2018 total returns gain 0.2 per cent;
Canadian equities lose -3.9 per cent

TORONTO, May 10, 2018 - Canadian defined benefit pension plans remained in positive territory in Q1 2018, according to the $650 billion RBC Investor & Treasury Services All Plan Universe – the industry’s most comprehensive universe of Canadian pension plans. Q1 2018 returns were 0.2 per cent, down from Q4 2017 returns of 4.4 per cent. Pension returns were 2.9 per cent in Q1 2017.

Canadian equities were greatly impacted during the quarter, posting a -3.9 per cent loss, compared to gains of 4.2 per cent and 2.3 per cent in Q4 2017 and Q1 2017 respectively. The TSX Composite Index followed a similar trend, posting a -4.5 per cent loss during the quarter compared to a 4.5 per cent gain in Q4 2017 and 2.4 per cent in Q1 2017.

Global equities retreated, returning 2 per cent in Q1 2018, a decrease from 6.1 per cent a quarter earlier. The MSCI World Index returned 1.6 per cent in Q1 2018, down from 5.7 per cent in Q4 2017 and 5.8 per cent in Q1 2017.

“The first quarter of 2018 was full of instability and volatility, with Canadian equities taking the biggest hit,” said Ryan Silva, Director, Head of Pension and Insurance Segments, Global Client Coverage RBC Investor & Treasury Services. “The health care and energy sectors, uncertainty around NAFTA trade negotiations as well as potential interest rate hikes weighed down the TSX Composite Index and other key indices. Geo-political concerns, coupled with international trade and interest rate anxieties also impacted global equity returns. Asset managers should remain vigilant to ongoing volatility for the remainder of the year, and maintain a diversified portfolio to actively manage their risk exposure.”

The NAFTA trade negotiations and potential interest rate hikes also impacted additional returns. Canadian fixed income assets posted a small return of 0.1 per cent in Q1 2018, compared to 2.2 per cent in Q4 2017 while the FTSE TMX Universe Canadian Bond Index returned 0.1 per cent in Q1 2018, down from 2 per cent in Q4 2017.

The Canadian dollar was the worst performing major currency during Q1 2018. In this time, the U.S. dollar appreciated versus the Canadian dollar by 2.9 per cent due to the uncertainty around trade talks and its impact on the Canadian economy and its monetary policy.

HISTORIC PERFORMANCE


Period

Return (%)

Period

Return (%)

Q1 2018

0.2

Q1 2016

     0.0

Q4 2017

4.4

Q4 2015

     3.1

Q3 2017

0.4

Q3 2015

    -2.0

Q2 2017

1.4

Q2 2015

    -1.6

Q1 2017

2.9

Q1 2015

     6.6

Q4 2016

0.5

Q4 2014

     2.7

Q3 2016

4.2

Q3 2014

     1.1

Q2 2016

2.9

Q2 2014

     3.0

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 16 countries across North America, Europe, Asia and Australia, delivering services to safeguard client assets and maximize liquidity. As a strong, stable partner, focused on meeting our clients' evolving needs, RBC I&TS has an unwavering commitment to managing operational risk in our business and the highest credit ratings among our peers. Rated by our clients as the #1 global custodian for seven consecutive years, RBC I&TS is trusted with CAD 4.3 trillion in client assets under administration as at January 31, 2018.

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For more information, please contact:
Briana D’Archi, +1 416 955 5658, briana.darchi@rbc.com
Ben Adams, +44 (0)20 7653 4109, ben.adams@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.

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