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The improvement continues for the canadian pension plans defined benefit

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August 8, 2017 09:45

Photo : Freepik

While the performance of canadian equities is spent in the red-to-1.9 % (against 2.3 % in the previous quarter), following closely the movements of the TSX index, canadian pension plans, defined benefit plans have retained their growth for a fifth consecutive quarter. They give off a yield of 1.4 % in the second quarter of 2017, according to data for the period, RBC investor Services and cash, which totals $ 650 billion in assets under management.

«Despite the status of various indicators, highlighting the good performance overall of the canadian economy, the weakening in the sectors of energy and goods, who were among the least efficient, has pulled the canadian stocks lower, said James Rausch, head, Cover customer — Canada, RBC investor Services and treasury services. Nevertheless, the directors of the canadian pension funds have continued to prudently manage the asset allocation of the portfolios in maintaining under-weighting canadian equities compared to fixed income securities of canadian and global equities, which has helped to generate a one-time overall performance positive for the quarter. «

The positive fundamentals

Although they are past a solid performance from 6.2% in the first quarter of 2017 at a yield of 2.3% in the second quarter, global equities have remained under the influence of positive fundamentals such as the encouraging signs of a stable recovery in Europe and good quarterly earnings of companies. All enthusiasm has however been tempered by the disappointing growth and the factors of political risk in the United States, as well as by the fact that the stock market recovery, global approach to its cap-natural, as evidenced by the shift of the MSCI World index, which rose from 5.8 % in the first quarter to 1.3 % in the second quarter of 2017.

Strength of the canadian dollar

After a period in negative territory in the fourth quarter of 2016, the canadian fixed income securities have consolidated their gains in the first quarter of 2017 by a new increase of 1.4 %. This growth contrasted with the general weakness in bond markets worldwide, as central banks are more likely to consider interest rate hikes. In anticipation of such action on the part of the Bank of Canada, bond yields have shown a slight rebound. The bond index universal FTSE TMX Canada has also maintained a positive growth, showing an increase of 1.1 % in the second quarter.

The strength of the canadian dollar continued to put pressure on stocks and bonds. The u.s. dollar continued its fall against the canadian dollar, registering a decrease of 2.62 % following a 0.6% decline in the first quarter of 2017.

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