Canadian pension plan sponsors saw a nice bounce back in market returns in the second quarter of 2020, according to a tracking service from the Bank of New York Mellon (BNY Mellon).
The median return of the BNY Mellon Canadian Master Trust Universe rose 9.23% in Q2. The one-year median return as of June 30, 2020, was 5.1%, while the median 10-year annualized return was 8.57%.
“Despite ongoing pandemic concerns, public markets rebounded with significant positive returns in the second quarter,” said Catherine Thrasher, head of strategic client solutions and global risk solutions with Toronto-based CIBC Mellon and BNY Mellon, in a release. “Canadian plan sponsors benefited with positive performance results, led by equities from all regions.”
While equities were up, plan sponsors trailed major market indexes, according to the tracking service.
For example, U.S. equity median performance was up 15.11% in 2020, but trailed the S&P 500 Index’s result of 15.35%.
Canadian equity posted a median return of 14.11%, but still ended up well behind the S&P/TSX Composite Index return of 16.97% in Q2.
Non-Canadian equity reported a median return of 13.50%, but underperformed the MSCI World Index return of 14.39%.
One exception to this trend was international equity, which posted a quarterly median return of 10.89%, ahead of the MSCI EAFE Index return of 10.12%.
In fixed income, the median return was 7.91% for Q2, outperforming the FTSE Canada Universe Bond Index, which saw a return of 5.87%.
The BNY Mellon Asset Allocation Trust Universes also found some positive news for emerging markets equity, which posted a positive return of 13.07% — only slightly behind the MSCI Emerging Markets Index Q2 return of 13.09%.
The asset allocation tracker found private equity to be a bit of an outlier for the quarter, posting a negative median return of -4.84%. Real estate also posted a negative median return of -2.75%.
Hedge funds posted a positive return of 2.49% for the quarter.
The BNY Mellon Canadian Master Trust Universe results are based on $255.5 billion worth of investment assets in Canadian investment plans, with the average plan size of $3.04 billion. It comprises 84 Canadian corporate, public and university pension plans and is designed to provide peer comparisons by plan type and size.