Mr. Sylvain Gervais reports

POWERING FORWARD: RBC INVESTOR SERVICES' CANADIAN PENSION PLANS START 2024 ON A POSITIVE NOTE

Royal Bank of Canada's RBC Investor Services (RBCIS) has released a report highlighting a median return of 3.6 per cent for its defined benefit (DB) pension plans during the first quarter of 2024.

Canadian equities showed a 6.8-per-cent increase for client plans, aligning closely with the TSX Composite Index's 6.6-per-cent rise, led by the energy (plus 13.1 per cent) and industrials (plus 11.1 per cent) sectors. Meanwhile, foreign equities for client plans generated gains of 9.8 per cent, slightly below the MSCI World Index return of 11.7 per cent.

Sylvain Gervais, managing director of business development at RBCIS, noted: "A growing interest in AI-exposed stocks drove growth-oriented equities to outpace value equities. For instance, MSCI World Growth yielded 13.1 per cent compared to MSCI World Value's 10.3 per cent. The communication services, information technology, and financials sectors performed strongly, with returns of 15.9 per cent, 15.2 per cent and 13.4 per cent respectively.

"While equity performance hints at an improving market sentiment, plans' Canadian fixed income weighting significantly influenced their portfolio performance this quarter," continued Mr. Gervais.

The Canadian fixed income component of plans saw a negative return of minus-1.9 per cent, a sharp decline from the prior quarter, mirroring the FTSE Canada Universe Bond Index's minus-1.2-per-cent return. The FTSE Canada Long Term Bond Index (minus-3.6 per cent) underperformed the FTSE Canada Short Term Bond Index (plus 0.3 per cent) due to rising yields.

Mr. Gervais also emphasized the importance of strategic planning for the future, stating: "Informed decision-making and pro-active risk management will be instrumental in capitalizing on emerging opportunities while mitigating potential threats. Looking ahead, asset managers are focusing on diversification strategies and technological advancements to navigate the evolving financial landscape effectively."

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