TORONTO, July 30, 2013 /CNW/ - Pension assets remained unchanged during
the second quarter of 2013, as a spike in interest rates in June
negated advances in April and May, according to the latest survey from
RBC Investor & Treasury Services.
According to the $460 billion RBC Investor & Treasury Services All Plan
universe - the industry's most comprehensive universe of Canadian
pension plans - defined benefit (DB) pensions returned zero per cent
for the quarter ending June 30, 2013, keeping year-to-date results at
4.5 per cent. "Market volatility returned in June following the Fed's
statements regarding its commitment to quantitative easing," said Scott
MacDonald, Head, Pension Segment Development for RBC Investor &
Treasury Services. "While all DB plans benefit from rising long term
bond yields as pension liabilities are reduced, those with risk
mitigating liability driven investment strategies were the hardest hit
during the quarter."
Bonds had their largest three month decline since 1994, losing 2.5 per
cent in the quarter and 1.7 per cent over six months. "Weakness was
across the market, but longer duration bonds were the most affected, as
the DEX Long Term Index declined 4.6 per cent in the quarter and DEX
Real Return Bonds are down 11 per cent year-to-date," noted MacDonald.
Canadian equities also lost ground within pension plans, declining 1.2
per cent compared to the S&P/TSX Composite, which was down 4.1 per cent
in the quarter. "The decline in the materials sector and mining stocks
in particular continued to be the key factor affecting performance this
quarter. Looking at the year-to-date figures, most pensions stayed in
positive territory despite the market's loss by remaining underexposed
to the sector and have subsequently outperformed the index by 4.2 per
cent," said MacDonald.
Foreign stocks provided the needed support this quarter, gaining 4.7 per
cent, mostly due to continued positive performance in the U.S. equities
market. This compares to the MSCI World Index which advanced 4.5 per
cent in the quarter. "Unhedged pension plans benefitted from the
Canadian dollar's weakness against most major currencies, with FX
returns accounting for over half of the gains," said MacDonald.
"Foreign Equities continue to lead year-to-date - up 15.4 per cent in
Canadian dollar terms."
About RBC Investor & Treasury Services
RBC Investor & Treasury Services, part of Royal Bank of Canada (RY on
TSX and NYSE), is a specialist provider of custody, payments
and treasury services for financial and other institutional investors
worldwide. The Investor & Treasury Services segment is comprised of
three businesses: Global Financial Institutions, Investor Services and
Treasury Services. Active in 15 markets globally, RBC Investor &
Treasury Services provides custodial, advisory, financing and other
services to safeguard clients' assets, maximize liquidity and manage
risk in multiple jurisdictions. RBC Investor & Treasury Services is
ranked among the world's top 10 global custodians, with $3.11
trillion in client assets under administration.
About RBC
Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate
under the master brand name RBC. We are Canada's largest bank as
measured by assets and market capitalization, and are among the largest
banks in the world, based on market capitalization. We are one of North
America's leading diversified financial services companies, and provide
personal and commercial banking, wealth management services, insurance,
and investor services and wholesale banking on a global basis. We
employ approximately 80,000 full- and part-time employees who serve
more than 15 million personal, business, public sector and
institutional clients through offices in Canada, the U.S. and 44 other
countries. For more information, please visit rbc.com.
RBC supports a broad range of community initiatives through donations,
sponsorships and employee volunteer activities. In 2012, we contributed
more than $95 million to causes worldwide, including donations and
community investments of more than $64 million and $31 million in
sponsorships.
© RBC Investor Services Limited 2013. RBC Investor Services Limited is a
holding company that provides strategic direction and management
oversight to its affiliates, including RBC Investor Services Trust,
which operates in the UK through a branch authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct Authority
and the Prudential Regulation Authority and in the DIFC through a
branch authorised and regulated by the Dubai Financial Services
Authority. In Australia, RBC Investor Services Trust is authorised to
carry on financial services business by the Australian Securities and
Investments Commission under the AFSL (Australian Financial Services
Licence) number 295018. All are licensed users of the RBC trademark (a
registered trademark of Royal Bank of Canada), and conduct their global
custody and investment administration business under the RBC Investor
Services™ brand name.
® / ™ Trademarks of Royal Bank of Canada. Used under license.
SOURCE: RBC
