Canadian equities were a key driver of performance, says CIBC Mellon
Canadians should feel confident that their retirement funds held in pension plans are managing volatility in the markets.
CIBC Mellon has released the latest reading of the financial health of Canadian pension plans with $316 billion in investment assets, with stats for the third quarter of 2024 showing continued resilience. The fund-level tracking service BNY Canadian Asset Strategy View universe shows 4.67% for Q3, while the one-year median was 17.96% and the 10-year annualized return was 7.12%.
The average plan size was $4.3 billion and plans over $1 billion underperformed the median return of the Total Canadian Asset Strategy View Universe in Q3 2024. Corporate Pension Plans posted a median performance of 5.19% for the third quarter, exceeding both Public Pension Plans and Foundations & Endowments universes.
"Despite significant volatility in the market and the increased geopolitical instability, Canadian pension plans experienced another robust quarter adding to their strong performance this year. The significant shift in interest rate expectations supported by decreasing inflation provided a strong tail wind for these positive results," said David Cohen, director of Global Risk Solutions, BNY. "Major Equity markets saw strong performance in Q3 with many indices reaching new all-time highs, while Fixed Income was also a contributor with the help of lower yields. Private asset classes remain stable providing low single digit returns in the third quarter.”
Canadian equity was the leader among traditional asset classes with a quarterly median return of 9.20% while Global Equity returns were the lowest at 5.07%. For non-traditional asset classes, hedge funds outperformed with a quarterly median return of 1.58%, while Private Equity ended the quarter with a median return of 1.35% and Real Estate delivered a negative performance for the quarter returning -0.31%.
The Canadian Fixed Income median return was 5.31% in the third quarter of 2024. Fixed Income outperformed relative to the FTSE Canada Universe Bond Index for the quarter, which returned 4.66%.
