Canadian pensions gain in Q3 2024, led by equities and stable private asset returns

The median return for the BNY Canadian Asset Strategy View universe, a service under BNY Global Risk Solutions, stood at 4.67 percent for the third quarter of 2024.

As of September 30, 2024, the one-year median return was 17.96 percent, while the median 10-year annualized return was 7.12 percent.

This universe includes $316bn in assets from 73 Canadian corporate, public, and university pension plans, averaging a plan size of $4.3bn.

BNY’s Asset Strategy View provides peer comparisons by plan type and size, with additional insights across traditional and non-traditional asset classes.

“Despite significant volatility in the market and the increased geopolitical instability, Canadian pension plans experienced another robust quarter adding to their strong performance this year,” stated David Cohen, director of Global Risk Solutions at BNY.

He explained that the shift in interest rate expectations, supported by decreasing inflation, provided a favourable environment for these positive results.

“Major Equity markets saw strong performance in Q3 with many indices reaching new all-time highs, while Fixed Income was also a contributor with the help of lower yields. Private asset classes remain stable providing low single digit returns in the third quarter.”

Canadian Equity had the highest quarterly performance among traditional asset classes with a median return of 9.20 percent, while Global Equity posted the lowest at 5.07 percent.

In non-traditional assets, Hedge Funds reported the highest quarterly median return of 1.58 percent, and Real Estate recorded a negative return of -0.31 percent for Q3.

Q3 2024 highlights of the BNY Canadian Asset Strategy View universe:

• The BNY Asset Strategy View universe of Canadian pension plans over $1bn underperformed the median return of the Total Canadian Asset Strategy View universe in Q3 2024.
• Corporate Pension Plans posted a median performance of 5.19 percent for the third quarter, exceeding both Public Pension Plans and Foundations & Endowments.
• All major equity segments posted positive returns in Q3.
• Canadian Equity posted a positive median return of 9.20 percent in the third quarter, behind the S&P/TSX Composite Index return of 10.54 percent.
• US Equity posted a quarterly median return of 5.53 percent, exceeding the S&P 500 Index return of 4.54 percent.
• Global Equity reported a median return of 5.07 percent in Q3, slightly lagging the MSCI World Index return of 5.11 percent.
• International Equity posted a quarterly median return of 6.02 percent, outperforming the MSCI EAFE Index return of 5.97 percent.
• Emerging Markets Equity posted a positive median performance for the quarter of 5.02 percent, underperforming the MSCI Emerging Markets Index return of 7.49 percent.
• The Canadian Fixed Income median return was 5.31 percent in the third quarter of 2024, outperforming the FTSE Canada Universe Bond Index, which returned 4.66 percent.
• Private Equity reported a positive quarterly median return of 1.35 percent, Real Estate reported a quarterly median return of -0.31 percent, and Hedge Funds reported a return of 1.58 percent.

BNY Canadian Asset Strategy View universe median plan returns:

All returns are posted gross of fee results, calculated in Canadian dollars.