<p><span>Canadian defined benefit pension plans closed the first quarter of 2022 in the red with a median return of -5.5%, the weakest quarterly return since Q1 2020 (-7.1%) according to the </span><a href="https://www.rbcits.com/en/home.page" target=" blank">RBC Investor & Treasury Services</a><span> All Plan Universe.</span></p>
<p><span>As global equity markets continued to hit new highs, defined benefit pension plans posted a Q4 median return of 4.5% and closed out 2021 with an 8.9% annual return – as compared to 2020’s 9.2% return – according to the RBC Investor & Treasury Services All Plan Universe, one of the industry’s largest and most comprehensive universes of Canadian pension plans.</span></p>
<p><span>Market sentiment turned decidedly negative in<i> September</i>, counteracting the majority of advances made in July and August, according to the latest analysis from the RBC Investor & Treasury Services All Plan Universe. Defined benefit (DB) pensions returned 0.6% for the quarter ending September 30, 2021, bringing the year-to-date results to 4.5%.</span></p>
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Negative fixed income returns offset solid equity gains
TORONTO, April 29, 2021 /CNW/ - Amidst an improved economic outlook – partially attributable to early phase vaccine rollouts and ongoing government support – Canadian DB pension plans posted a -0.2% median return in Q1 2021, according to the RBC Investor & Treasury Services All Plan Universe. The loss came on the heels of a Q4 2020 return of 5.4% and an annual 2020 return of 9.2%.
As projections pointed to higher expected growth, investors readied themselves for mounting inflationary pressure, causing bond yields to move up sharply and fixed income securities to lose ground. Fixed income assets held by pension plans posted a median return of -7.1% in Q1 2021, compared to 1.1% in Q4 2020. The FTSE TMX Universe Canadian Bond Index returned -5.0%, with interest-rate-sensitive longer-dated bonds (FTSE TMX Long Term index -10.7%) underperforming their shorter-dated bond counterparts (FTSE Short Term index -0