Canadian defined benefit (DB) pension plans posted a slim uptick in Q3 2018, returning 0.1% , down from Q2 2018 returns of 2.2%, Toronto-based RBC Investor & Treasury Services (RBC I&TS) announced Tuesday.
Canadian equities lost 0.3% and fixed income assets dropped 1.5% during the quarter, which outweighed a 2.3% gain in global equities, RBC I&TS says.
“Despite a lackluster quarter for Canadian equities, Canadian pension returns remain in positive territory for 2018 at 6.7% for the year,” says Ryan Silva, director, head of pension and insurance segments, global client coverage at RBC I&TS.
The decline in Canadian stocks in Q3 2018 followed a 6.8% gain in the previous quarter. Weakness in energy and materials stocks led the index decline in the third quarter. The healthcare sector was the lone bright spot, thanks to strength in cannabis stocks in particular, RBC I&TSX says.
“Interest rate hikes and free trade negotiations weighed on Canadian indices and impacted returns this quarter. However, the newly negotiated United States Mexico Canada Agreement should provide some relief in Q4 2018,” Silva says.
“Conversely, as we head into the final quarter of the year, ongoing geo-political concerns, interest rate anxieties globally, and an economic slowdown in China shouldn’t be ignored. Asset managers will need to maintain their vigilance to the ongoing volatility and retain a diversified portfolio to actively manage their risk exposure.”