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Canadian pension plans benefitted from robust equity markets to close out 2020 with 10 per cent gains, according to the Northern Trust Canada Universe.
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 service offerings.
The latest data shows the median Canadian plan returned 5 per cent for the final quarter of last year.
During Q4 2020, major global economies continued to feel the impact of COVID-19, says Northern Trust, adding that despite pandemic headwinds, global equity markets generated healthy positive returns as investors welcomed the relief of further fiscal stimulus and the long-awaited approval of vaccines.
Despite the year beginning with a very weak and volatile first quarter, major equity indices closed 2020 with strength and momentum, generating attractive positive returns, the bank states.
Equity returns gained momentum in Q3 and continued to generate strong return until the end of the year.
Canadian equities advanced 9 per cent for the fourth quarter and 5.6 per cent for the year. The health care and consumer discretionary sectors led performance for the same quarter and the information technology sector was the top performer for the year.
US equities also posted solid gains with the S&P 500 Index generating 7 per cent in CAD in Q4 and 16 per cent in CAD for the year.
Elsewhere, the Bank of Canada maintained its current pace of their quantitative easing programme and left its overnight interest rate unchanged at 0.25 per cent.
The Canadian fixed income market, as measured by the FTSE Canada Universe Bond Index, returned 0.6 per cent for Q4 and 8.7 percent for the year. During the final quarter, the Canadian yield curve witnessed a rise in long term government bond yields while short term yields declined.
Katie Pries, president and CEO of Northern Trust Canada, says: “The global pandemic undoubtedly was the focal point over the last year, but 2020 also symbolised a period of leadership, adaptation and resilience.”
Pries adds: “Canadian pension plan sponsors faced the difficult task of navigating through an extraordinary and unpredictable period in history, while safeguarding plan assets for future retirement. This test of resiliency was met with solid performance.”
