Canadian defined benefit pension plan sponsors recorded an uptick in returns for the first-quarter of 2017, according to the Northern Trust Canadian Defined Benefit Pension Plan universe. The median plan gained 3.0 percent, following a loss of 1.2 percent in the fourth quarter of 2016. Positive performance was primarily driven by strong equity markets while fixed income also experienced positive performance in a reversal from last quarter.
The Northern Trust Canada Universe tracks the performance of Canadian institutional investment plans, which subscribe to performance measurement services as part of Northern Trust’s asset servicing offerings.
“Canadian pension funds had a good start to 2017 after a minor setback in the fourth quarter of last year,” said Arti Sharma, head of Northern Trust Canada. “Over the past year, pension funds gained a healthy 9.5 percent, bolstered by stronger stock market performance.”
Global equity markets started the year on a strong note with all broad market indices registering positive performance. The median return on Canadian Equity at 3.8 percent outperformed the S&P/TSX Composite by 1.6 percent. Nine out of the 11 GICS (Global Industry Classification Standard) sectors posted positive returns, with five sectors reporting gains of 5 percent or more.
The U.S. Equity market hit fresh all-time highs during the quarter, with the S&P 500 returning 5.5 percent. Optimism on the geopolitical front and a stronger Japanese Yen helped the MSCI EAFE index gain a return of 6.8 percent in the first quarter. A weaker U.S. dollar, better than expected economic data and easing concerns over the current U.S. administration’s protectionist measures contributed to the MSCI Emerging Markets index ending the quarter on a strong note with a return of 10.9 percent. In the Northern Trust Canada Universe, the median global equity return of 5.3 percent underperformed the MSCI World index return by 0.5 percent.
The Bank of Canada, citing “significant uncertainties” and weighing on the outlook for Canada’s economy, held rates steady at 0.5 percent. The Canadian Fixed Income market as measured by the FTSE TMX Universe gained 1.2 percent for the quarter with long and mid-term bonds outperforming short-term bonds.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 22 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2017, Northern Trust had assets under custody of US$7.1 trillion, and assets under management of US$1 trillion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.
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