Pension funds ride stock markets to solid gains

Thanks to rebounding equity markets, Canadian pension plans enjoyed double digit returns in 2020, according to a new report from Northern Trust.

The median Canadian pension plan rose by 5.0% in the fourth quarter and finished the year with a 10.0% gain, the report said, based on its Northern Trust Canada Universe.

The strong pension fund returns came amid widespread gains in global equity markets.

Canadian stocks rose 9.0% in the fourth quarter to finish with a 5.6% gain for the year, and U.S. and international equities recorded strong returns too, it noted.

Northern Trust reported that the S&P 500 Index rose by 7.0% in Canadian-dollar terms in Q4, and was up by 16.3% for 2020.

At the same time, the MSCI EAFE Index returned 10.7% (in Canadian dollars) for the quarter, and was up 6.4% for the year; the MSCI Emerging Markets Index gained 14.2% in Q4 and 16.6% on the year.

Additionally, the firm noted that the FTSE Canada Universe Bond Index edged up 0.6% in the fourth quarter, and rose 8.7% in 2020.

“During the quarter, the Canadian yield curve witnessed a rise in long term government bond yields while short term yields declined,” the report said. “Corporate bonds led performance for the quarter, while provincials outpaced federal and corporate issuers for the year.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.