Canadian pension funds struggled through the first quarter of 2025, just like retail investors, producing low-single-digit returns on average.
Defined benefit (DB) plans managed by RBC Investor Services returned just 1.1% on average during the quarter. That includes funds in the public and private sectors. Plans in the Northern Trust Canada Universe fared a little better, delivering a median return of 1.5%.
“The first quarter reminded us that sector positioning, currency exposure and geopolitical awareness are key to pension performance,” said Isabelle Tremblay, asset owner segment lead at RBC Investor Services.
The euro’s strong performance relative to the loonie added to foreign equity returns, “while political developments, including leadership changes both domestically and abroad, sparked investor recalibration,” Tremblay said. “Pension plans that remained diversified and nimble were better positioned to navigate these challenges.”
DB plans served by RBC earned 1.2% from Canadian equities (against a 1.5% rise in the S&P/TSX composite index). Investments in the materials sector returned 20.3%. Foreign equities lost 0.1%. And fixed income delivered 1.8%.
“Fear and uncertainty cascaded across financial and currency markets during the first quarter, dampening the sentiment of market participants across the globe,” said Northern Trust Canada CEO Katie Pries. “As investors look for clarity and markets seek out a path to certainty and stability, pension plan sponsors remained sound.”