RBC Investor Services achieved a 1.1% return for DB pension plans in Q2 2024, highlighting market dynamics
RBC Investor Services (RBCIS) has reported a positive median return of 1.1 percent for its clients' defined benefit (DB) pension plans in the second quarter of 2024, with a 4.4 percent return for the first half of the year.
This analysis, provided quarterly by RBCIS, includes various client plans across private and public sectors.
Client plans' global equities gained 3.1 percent, slightly underperforming the MSCI World Index's 3.8 percent return. The Information Technology sector led the MSCI World Index with a 12.6 percent return, followed by Communication Services at 9.3 percent.
Growth style stocks continued to outperform value stocks, with the MSCI World Growth up 7.5 percent compared to MSCI World Value at 0.1 percent.
US equities outshined international ones, as shown by the S&P 500's 5.4 percent gain, primarily driven by strong performance in Information Technology, compared to the MSCI EAFE's 0.7 percent return.
Canadian equities for RBCIS DB pension plans showed a negative return of 0.6 percent, matching the TSX Composite Index's -0.5 percent return. The Financials sector fell by 1.2 percent and Industrials by 3.4 percent, overshadowing a 7.4 percent gain in the Materials sector.
In the Canadian fixed income asset class, RBCIS DB pension plans returned 0.8 percent, aligning with the FTSE Canada Universe Bond Index's 0.9 percent return. This represents a rebound from a negative return in Q1, largely due to the Bank of Canada's interest rate adjustment in June.
Short-term FTSE Canada Universe bonds outperformed with a 1.2 percent return, while long-term bonds remained nearly flat at 0.2 percent.
Isabelle Tremblay, director, Client Solutions, Asset Owner Segment lead at RBCIS, emphasized the importance of diversification and proactive risk management.
She noted, “The market continues to experience volatility due to ongoing geopolitical tensions. Inflation trended favourably in Q2 following the June Bank of Canada rate cut. With the consecutive rate adjustment announced in July, plan managers are continuing to adapt their strategies and navigate the evolving environment.”
