Powering forward: RBC Investor Services' Canadian pension plans start 2024 on a positive note

TORONTO, April 30, 2024 – RBC Investor Services (RBCIS) released a report highlighting a median return of 3.6% for their defined benefit (DB) pension plans during the first quarter of 2024.

Canadian equities showed a 6.8% increase for client plans, aligning closely with the TSX Composite Index’s 6.6% rise, led by the energy (+13.1%) and industrials (+11.1%) sectors. Meanwhile, foreign equities for client plans generated gains of 9.8%, slightly below the MSCI World Index return of 11.7%.

Sylvain Gervais, Managing Director of Business Development at RBCIS, noted, “A growing interest in AI-exposed stocks drove growth-oriented equities to outpace value equities. For instance, MSCI World Growth yielded 13.1% compared to MSCI World Value's 10.3%. The communication services, information technology, and financials sectors performed strongly, with returns of 15.9%, 15.2%, and 13.4% respectively.

“While equity performance hints at an improving market sentiment, plans’ Canadian fixed income weighting significantly influenced their portfolio performance this quarter,” continued Gervais.

The Canadian fixed income component of plans saw a negative return of -1.9%, a sharp decline from the prior quarter, mirroring the FTSE Canada Universe Bond Index's -1.2% return. The FTSE Canada Long Term Bond Index (-3.6%) underperformed the FTSE Canada Short Term Bond Index (+0.3%) due to rising yields.

Gervais also emphasized the importance of strategic planning for the future, stating, "Informed decision-making and proactive risk management will be instrumental in capitalizing on emerging opportunities while mitigating potential threats. Looking ahead, asset managers are focusing on diversification strategies and technological advancements to navigate the evolving financial landscape effectively.”                       

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About RBC Investor Services

RBC Investor Services delivers asset servicing solutions to Canadian asset managers and asset owners, investment counsellors and other financial institutions. Part of Royal Bank of Canada, Canada’s largest bank and one of the top 10 banks globally, our focus is on safeguarding the assets of our clients and supporting their growth. RBC Investor Services has over C$2.5 trillion of assets under administration. Learn more at rbcis.com.

For more information, please contact:

Ylana Kurtz, Corporate Communications, 416-848-9364