Sharp rally in global equity markets and
healthy gains in fixed income securities
TORONTO, July 29, 2020 /CNW/ - Canadian defined benefit
pension plans experienced a pronounced upsurge in the second
quarter, posting a median return of 9.6 per cent, according to the
RBC Investor & Treasury Services All Plan Universe. This marked
the highest single quarter return in the universe's history,
reversing the steep Q1 losses and raising the median plan's return
to 1.4 per cent on a year-to-date basis. The gains followed a
series of aggressive fiscal and monetary support measures
introduced in March to address the impact of the virtual shut down
of the global economy due to COVID-19.
Global equity markets rallied off their March lows and recovered
most of their losses from Q1. While there was a brief surge in
cyclical stocks, growth stocks ultimately outperformed value. The
median pension plan generated 13.9 per cent in its non-Canadian
equity holdings, compared to 14.2 per cent for the MSCI World
index. Strength in the Canadian dollar trimmed some local currency
returns over the quarter for unhedged plans (MSCI World Index
returned 18.5 per cent in local currency terms).
In Canada, the TSX Composite
returned a healthy 17.0 per cent, as 10 out of the 11 economic
sectors generated positive returns, with Information Technology
(led by Shopify) taking the top spot (+68.3 per cent), followed by
the Materials, Consumer Discretionary and Energy sectors. The
median Canadian equities returned 13.0 per cent and trailed the
benchmark by 4 per cent. On a year-to-date basis, Canadian equities
returned -10.4 per cent.
Fixed income securities returned 8.7 per cent, compared to 5.9
per cent for the FTSE TMX Canada Universe Bond Index. Positive
returns were generated by both the decline in longer term yields
(FTSE TMX Canada Long Bond Index returned 11.2 per cent) and the
tightening of credit spreads (FTSE TMX Canada Corporate Bond Index
returned 8.1 per cent).
"The actions the Bank of Canada
and Federal Government have taken over the past months to support
the economy and financial system are unprecedented – not even seen
following the 1929 stock market crash – and the markets have been
quick to respond," remarked David Linds, Managing Director and Head
of Asset Servicing, Canada. "In
this environment where so many of us are at home, it continues to
be somewhat of a winner-takes-all scenario, with the market being
driven primarily by companies that have continued to exhibit growth
and safe haven investments – such as precious metals. The long term
implications of COVID-19 on the economy are unclear."
Historic performance
Period
|
Return (%)
|
Period
|
Return (%)
|
Q2 2020
|
9.6
|
Q1 2018
|
0.2
|
Q1 2020
|
-7.1
|
Q4 2017
|
4.4
|
Q4 2019
|
2.0
|
Q3 2017
|
0.4
|
Q3 2019
|
1.7
|
Q2 2017
|
1.4
|
Q2 2019
|
2.7
|
Q1 2017
|
2.9
|
Q1 2019
|
7.2
|
Q4 2016
|
0.5
|
Q4 2018
|
-3.5
|
Q3 2016
|
4.2
|
Q3 2018
|
0.1
|
Q2 2016
|
2.9
|
Q2 2018
|
2.2
|
Q1 2016
|
0.0
|
About RBC
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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 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 4,500 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
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