TORONTO, April 29, 2020 /CNW/ - During the first quarter
of 2020, the global economy came to a virtual standstill on account
of COVID-19 containment measures. Worldwide financial markets sold
off, commodity prices plunged and governments and central banks
initiated aggressive measures to cushion the blow. Canadian defined
benefit pension plans in the RBC Investor & Treasury Services
All Plan Universe experienced their steepest decline since 2008,
posting a median return of -7.1 per cent for the quarter.
MSCI World Index posted a quarterly return of -13.3 per
cent, with growth stocks considerably outperforming value stocks.
While all economic sectors experienced negative returns, energy
fared the worst (and information technology took the lead). The
Canadian dollar weakened against its US counterpart. As such, plans
with unhedged exposure to non-Canadian equities were somewhat
sheltered from local currency losses.
S&P/TSX Composite Index posted a return of -20.9 per cent
for the quarter, wiping out the annual gains from 2019 and
significantly underperforming the global market. The impact of the
international health crisis was the primary cause, but the dispute
over the natural gas pipeline and the Russia-Saudi
Arabia oil price war were additional factors.
FTSE Canada Universe Bond Index posted a quarterly return of 1.6
per cent, affording plans some shelter from the losses in equity
markets. Following the cuts to interest rates by the Bank of
Canada, the yield curve steepened,
and short term bonds outperformed their longer term counterparts.
There was a noticeable flight to safety as investors sold off
riskier investments (FTSE Canada High Yield Index, with returns of
-9.0 per cent) and embraced government bonds (FTSE Canada Federal
Bond index, with returns of 5.1 per cent).
"It has been an exceptionally difficult period for Canadian
pension plans to navigate, as the markets have been experiencing an
unprecedented amount of volatility across asset classes," reported
David Linds, Head, Canadian Asset Servicing, RBC Investor &
Treasury Services. "However, the substantial monetary and fiscal
policy response from governments across the globe gives us room for
optimism. While it's difficult to speculate on what may happen over
the short term, we hope these measures will lead to some
reawakening of our economic growth in the near future."
Lowest median
returns in the last 25
years (based on
peer universe data)
|
|
All Plan Universe
- recent median returns
|
Period
|
Return (%)
|
|
Period
|
Return (%)
|
Period
|
Return (%)
|
Q3 2008
|
-8.2
|
|
Q1 2020
|
-7.1
|
Q1 2018
|
0.2
|
Q3 1998
|
-7.9
|
|
Q4 2019
|
2.0
|
Q4 2017
|
4.4
|
Q1 2020
|
-7.1
|
|
Q3 2019
|
1.7
|
Q3 2017
|
0.4
|
Q3 2002
|
-5.9
|
|
Q2 2019
|
2.7
|
Q2 2017
|
1.4
|
Q3 2011
|
-4.6
|
|
Q1 2019
|
7.2
|
Q1 2017
|
2.9
|
Q1 2003
|
-4.1
|
|
Q4 2018
|
-3.5
|
Q4 2016
|
0.5
|
Q2 2002
|
-3.9
|
|
Q3 2018
|
0.1
|
Q3 2016
|
4.2
|
Q4 2018
|
-3.8
|
|
Q2 2018
|
2.2
|
Q2 2016
|
2.9
|
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
Royal Bank of Canada is a global financial institution with
a purpose-driven, principles-led approach to delivering leading
performance. Our success comes from the 85,000+ employees who bring
our vision, values and strategy to life so we can help our clients
thrive and communities prosper. As Canada's biggest bank, and one of the largest
in the world based on market capitalization, we have a diversified
business model with a focus on innovation and providing exceptional
experiences to our 17 million clients in Canada, the U.S. and 34 other countries. Learn
more at rbc.com.
We are proud to support a broad range of community initiatives
through donations, community investments and employee volunteer
activities. See how at rbc.com/community-social-impact.
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 4,700 employees in 16 countries
across North America, Europe and Asia. 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, RBC I&TS
is a financially strong partner with among the highest credit
ratings globally.
SOURCE RBC Investor & Treasury Services