CANADA - Canadian pension fund returns have surged following a strong performance in the third quarter.
Research from RBC Dexia investor services – which has C$2trn (US$1.9trn) in client assets under administration – revealed Canadian funds enjoyed returns of 7.2% in the quarter ending September 30, 2009.
Total returns over the year-to-date have now reached 14.3%, the survey said.
However, RBC Dexia director of advisory services Don McDougall was cautious about the strength of the schemes going forward.
“Two solid back-to-back quarters doesn’t necessarily make a recovery, but it’s good to see some positive momentum,” he said.
Strong performances in domestic stocks – particularly within the financial, energy and materials sectors – spearheaded the recovery.
McDougall said it was “remarkable” the pension funds were able to keep pace with the S&P TSX composite index given their underexposure to all three sectors.
Canadian bonds also contributed, advancing 3.4% in the quarter and 8.2% so far this year.
However, currency losses in foreign equity somewhat dampened the recovery, with the Morgan Stanley Capital International (MSCI) World index outstripping pensions by almost 10%.
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