Canadian funds post sharpest loss since 2008

CANADA - Canadian pensions marked their lowest quarterly returns since the start of the financial crisis on the back of world-wide market uncertainty, said RBC Dexia.

Canadian pension assets fell 5.5% in the three months ending 30 September 2011, bringing year-to-date performance within the C$340bn ($337.9bn) RBC Dexia universe down to -3.2%.

RBC Dexia director of advisory services, Don McDougall said: "Ongoing uncertainty over Europe's sovereign debt crisis, a US downgrade and mounting fears of slower global economic growth drove pensions to their lowest quarterly result since the 2008 financial crisis."

The MSCI World index dropped by almost 10% with the decline led mainly by weakness in European banks.

"Exchange rates were a key this quarter as a weaker Canadian dollar against most major currencies - particularly the US dollar, helped reduce the loss to Canadian investors," said McDougall.

Canadian equity was the worst performing asset class for Canadian plans as the S&P TSX Composite lost 12% in the quarter and 11.9% year-to-date.

Bonds performed well as investors sought refuge, with an increase of 2.5% year-to-date.

"Fixed income strength continued to come from declining long-term bond yields as the DEX Long Term bond index had its best three-month showing in 20 years, advancing by 9.8% over the quarter," he said.