Briefly: “Record losses for Canadian pension plans” and more of Friday’s news

In addition to the myriad crises witnessed over the past 13 months, 2008 now has the dubious distinction of being the worst year on record for Canadian pension plans, as assets dropped 7% in the fourth quarter alone, according to RBC Dexia Investor Services.

The Q4 fall added the finishing touch to a 15.9% decline for the year.

“The last two quarters of 2008 were particularly brutal, but the pull-back actually started in the summer of 2007,” says Don McDougall, director of advisory services for RBC Dexia. “The dismal outcome for 2008 eclipses the previous annual record set in 1974 when pension portfolios shrank by 12.7%.”

While pension plans took a beating, the hardest hit asset class was domestic equity as the S&P TSX Composite index lost 33% over the year.

“Pensions fared a little better, outperforming the index by 1.5% on the strength of their holdings in consumer staples, the only sector to remain unscathed,” says McDougall. All other sectors shed between 21.1% and 48.4% from the beginning of the year, while financials, the last holdouts, tumbled 29.6% in the final quarter.

Global equities lost 27.8% for the year, in Canadian dollar terms, lagging the MSCI World Index by 1.9%. “Most pension funds remained under-exposed to the US market,” reported McDougall.

He explained that the record losses incurred by pension plans should be taken in context, as there is no comparable time period to measure against.

“Pension performance data goes back only to the early 1960’s,” he says. “Before that, we would have to look to the Great Depression of 1929-32, but figures are sketchy. Pensions were uncommon in that era and, in any case, equity exposure would have been quite limited.”

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Desjardins offers SRI portfolio suite

Desjardins Group has announced the creation of a new suite of socially responsible investment portfolios, developed in co-operation with The Ethical Funds Company, which is half-owned by Desjardins.

“Desjardins Group is proud to play a leadership role in this sector and promote this type of investment for the benefit of its members and the community as a whole,” said Normand Paquin, Desjardins’ senior vice-president, investment funds and trust services.

The SocieTerra line of portfolios are available for four investment profiles, and are made up of Desjardins Environment Fund and eight Ethical Funds.

“For Desjardins Group, socially responsible investing is much more than a symbol,” Paquin said. “The Shareholder Action Program ensures SocieTerra portfolio holders that Desjardins and its partner, The Ethical Funds Company, play an active role in socially responsible investing.”

The SocieTerra portfolios are available to Desjardins members and their clients through the Desjardins’ caisse/branch network across Quebec and Ontario.

Desjardins launched its Environment Funds in the 1990s. SRI is a logical extension, taking into account corporate governance and labour issues as well as environmental impact.

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Excel waives money market management fee

Excel Funds Management has announced that it will waive the management fees on its money market fund, citing “the historically unprecedented low level of short-term interest rates in Canada.”

“Our goal is to offer short-term investors a positive yield on their money market investments and we are doing our part to deliver on that goal” said Bhim D. Asdhir, president of Excel. “This is an industry-wide challenge, and we are not waiting to see a negative yield. We feel that this is the right thing to do given the nature of this asset class.”

The management fee on A series fund units had been 25 basis points, while the F series fee was 15 basis points.

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Women in Capital Markets call for nominations

The call has gone out for nominations for the Women in Capital Markets Award for Leadership, which honours a senior executive who has demonstrated commitment to advancing and supporting women in the capital markets.

Both women and men are eligible for the award, which will be handed out at the Vinifera WCM Awards Gala on March 11, 2009, at The Carlu in Toronto.

A nomination form can be downloaded from the Women in Capital Markets website. Submissions must be made on or before Thursday, February 19, at 5 p.m.

Women in Capital Markets is a non-profit organization that aims to support and advance female leaders in business, foster accountability for diversity in the industry, and recognize leaders who have contributed significantly to the advancement of women in the capital markets.

(01/23/09)