Piggybank With Eyeglasses And Calculator On Wooden Table, TFSA, RRSP
andreypopov/123RF

Weaker markets and the dimming global economic outlook combined to curb investment returns for Canadian defined benefit (DB) plans in the third quarter, according to new data from RBC Investor & Treasury Services (RBC I&TS).

RBC reported that its DB pension index recorded a 1.7% median return in the third quarter, down from 2.7% in the previous quarter.

“While markets remain volatile, the ongoing trade tensions between the U.S. and China, in addition to the geopolitical turbulence surrounding Brexit, continue to propel very modest pension plan returns,” said Ryan Silva, director of client coverage at RBC I&TS.

While Canadian equity returns actually ticked up in Q3, global equities were weaker.

Global equity returns declined from 1.8% in the second quarter to just 0.8% in Q3.

RBC reported that returns from Canadian fixed income were also weaker in Q3 “as Canadian bond yields also continued to drop in step with global bonds.”

Canadian equities were the bright spot in the quarter, returning 2.5%, up from 2.3% in the previous quarter.

RBC noted that nine of 11 sectors on the TSX posted positive returns in Q3, led by the utilities and real estate sectors.

“Plan sponsors are encouraged to consider taking a defensive approach to lower investment risks, such as moving into private assets, blue chips and other relatively safe investments with stable track records,” said Silva.