CANADA - The global stock market rally helped Canadian schemes claw back most of their 2008 losses, a survey showed.
Data from RBC Dexia Investor Services showed that out of a universe of 40 Canadian plans, the median return was 16.2% last year, in contrast to a loss of 15.9% in 2008 at the height of the financial crisis.
"The speed of the rally, particularly in the second and third quarters caught pensions by surprise, as many remained under-exposed to equities," said Don McDougall, the firm's director of advisory services.
Canadian shares were the top performing asset class with the S&P TSX Composite index, up 35.1%, its best calendar year result since 1979.
The Canadian equity portion of the plans still managed to outpace the index by 0.3% despite being under-weight financials and the energy and mining sector, which dominated the gainers.
Schemes also benefited from the rally in international stock markets, but funds with no currency hedging would have lost out because of the stronger Canadian dollar against most world currencies.
The MSCI World index returned 25.7% in 2009, but a lack of hedging would have slashed foreign equity returns by more than half for Canadian pension funds.
In domestic bonds, Canadian pensions advanced 7.9% last year, beating the DEX Universe index by 2.5%.
Meanwhile, corporate spreads narrowed throughout 2009 across all maturity categories in a stark reversal from last year.
"Long-term corporate debt outdid long-term federal credits by a staggering 29.7% for the year," said McDougall.
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