MONTREAL – Canadian pension plans rode a strong stock market performance last year to more than fully recover from the 2008 financial crisis, says a survey by RBC Dexia Investor Services.
Pension assets gained 4.3% in the fourth quarter, ending what was a volatile, roller-coaster ride that netted a 10.4% improvement for the year, RBC Dexia said.
It was the second consecutive year of double-digit returns. RBC Dexia’s latest survey involved 44 pension plans of various sizes across the country with $340 billion in total combined assets.
“From a performance perspective they have recovered and beyond,” Fay Coroneos, global head of risk and investment analytics, said in an interview.
The pension plans almost mirrored the TSX, gaining 17.2% compared to 17.6% by the index.
Canadian equity markets flourished last year, with nine of 10 TSX sectors enjoying double-digit annual gains. Strong returns were realized in the energy, materials, industrials and consumer discretionary sectors.
Despite the volatility of global markets over the past decade, Canadian pension plans have achieved an average annualized return of 5.4%.
Coroneos said pensions plan owners have learned the lesson of the last decade that diversification and disciplined investing is key in the long run.
They have changed their investment strategies and are now much more concerned about matching their assets to their liabilities as they focus on the long-term, she added. READ MORE