Canadian defined benefit plans, buoyed by stronger global equity and fixed income returns, continued to post positive returns in the second quarter, according to the Northern Trust Canadian Defined Benefit Pension Plan universe.
“The median Canadian plan returned 2.4 percent, a modest decline from the first quarter of 2017,” said Arti Sharma, President and CEO of Northern Trust Canada. “Pension plans having a larger allocation to fixed income and, in particular, longer duration bonds, did better in the second quarter.”
The Northern Trust Canada Universe tracks the performance of Canadian institutional investment plans that subscribe to performance measurement services as part of Northern Trust’s asset servicing offerings.
Falling crude prices and weakness in chemicals, fertilizers and base metals caused the S&P TSX Composite to fall by 1.6 percent in the second quarter; this despite positive returns in eight of the 11 GICS sectors. The composite return on Canadian equity was at -0.2 percent for the quarter and 3.6 percent year-to-date.
The U.S. equity market as measured by the S&P 500 Index finished the quarter up 0.4 percent. Healthcare was the best performing sector followed by Industrials and Information Technology. The MSCI EAFE, which measures the performance of international developed markets, rose 3.6 percent over the quarter. Europe, with stronger corporate performance and reduced political risk, finished the quarter on a particularly strong note. The MSCI Emerging Markets index closed the second quarter up 3.6 percent with Eastern Europe and China contributing largely to the positive performance. The composite global equity manager returned 1.3 percent in the second-quarter, compared to a return of 1.5 percent for the MSCI World index.
The Canadian fixed income market as measured by the FTSE TMX Universe Bond Index gained 1.1% over the quarter. With the Canadian yield curve flattening substantially in the second quarter, long term bonds (4.1 percent) outperformed mid (-0.1 percent) and short-term (-0.4 percent) 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 June 30, 2017, Northern Trust had assets under custody of US$7.4 trillion, and assets under management of US$1.03 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.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/disclosures.