CANADA - Credit crunch caused Canadian pension plans to suffer loses in the final two quarters of 2007, according to RBC Dexia Investor Services.
Don McDougall, director advisory services for RBC Dexia, said: "2007 was tumultuous, as the soaring loonie and spiking energy prices reached record highs, against a backdrop of tightening global credit and recessionary pressures in the US. However, after four consecutive years of double-digit annual returns, some weakening was in the cards."
Canadian equities were the dominant asset class, returning 8.5 % over the year.
Currency was also critical factor for Canadian-based investors. Year-over-year, Canada's dollar appreciated by more than 12% against a basket of world currencies, including 16% against the US Dollar, 15% against the British Pound and 9% against the Japanese Yen.
"The loonie's remarkable ascent against major currencies prevented most pension plans from benefiting from rising foreign stock markets," added McDougall.
Canadian bonds also did badly, earning only 3.4% for the year, despite a solid 2.6% rise in the final quarter - their worst annual performance since 1999, according to McDougall.
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