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The returns for north american equity improve the position of pension funds

by

Alain Thériault

31 July 2018 13:30

Photo : Freepik

Canadian and u.s. shares have allowed pension fund managers to improve the solvency of pension plans, according to the study Universe of performance of mutual fund managers, pension funds of Morneau Shepell.

An excellent performance of the stock markets of canada and the u.s. has enabled the managers of mutual funds diversified record in the second quarter with a median return before management fees of 2.9 % during the second quarter of 2018. It is a performance equal to that of the reference portfolio, divided to 55 % equities and 45 % fixed-income securities. Many pension funds use this portfolio.

«Most stock markets posted excellent results in the second quarter, which allowed pension funds to get good returns. The canadian and us equities have done especially well, with returns of 6.8 % for the S&P/TSX composite index and 5.6% in canadian dollars for the S&P 500, » says Jean Bergeron, vice-president and group leader of management consultancy services, assets and risks of Morneau Shepell.

 

 

Solvency Ratio up

Mr. Bergeron added that the financial situation of the pension funds according to the approach of solvency has benefited from higher yields to the increase in the actuarial liabilities. Their solvency is improved for the second quarter of 2018. «The solvency ratio of a pension fund average has increased by 1.3 to 1.9 percent since the beginning of the year,» he said.

During the second quarter of 2018, the managers of mutual funds are diversified, have produced, on average, a return equal to that of the benchmark portfolio. In fact, the median performance of managers (2.9 percent) was equal to the performance of the reference portfolio (distributed at 55 % equities and 45 % fixed-income securities. It is a portfolio used by several pension funds.

Sectors that are less happy

In return, the actions of emerging countries have experienced a difficult quarter with a return of -6,0 % in canadian dollars.

The performance of all of the obligations, for its part, was modest, reaching to 0.5 % percent, equal to that of the benchmark index. Long-term bonds have generated a return of 0.9 %, whereas the obligations in the medium term have generated a return of 0.2 % and the short term of 0.3 %. High yield bonds posted a yield of 1.3 %, and real-return bonds pay a return of 2.0 %.

Universe performance

The Universe of performance of mutual fund managers pension fund includes approximately 336 mutual funds managed by almost 51 investment management companies. The mutual funds of the participating companies represent a market value of more than $ 268 billion.

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