Northern Trust Pension Universe Data: Canadian Pension Plans Benefit From Sharp Rebound in Global Equities During Second Quarter 2020
“Despite the level of volatility witnessed over the last several months, Canadian pension plans are tracking in a positive direction, with the median plan in the Northern Trust Canada Universe generating a solid 9.9% gain for the second quarter,” said
The Northern Trust Canada Universe tracks the performance of Canadian institutional investment plans that subscribe to performance measurement services as part of Northern Trust’s asset service offerings.
Global financial markets rallied in the second quarter, rebounding from the sharp drop in equities at the start of the global pandemic crisis. Trade frictions and geopolitical tensions resurfaced but were soon overshadowed by extraordinary government measures to curb the economic fallout from the pandemic. Massive fiscal stimulus packages implemented around the globe, coupled with accommodative central bank policies, provided a solid foundation for the markets. During the latter part of the quarter, many countries slowly emerged from lockdowns and economies began to reopen, triggering early signs of improvement in economic activity and fueling investor optimism.
Canadian Equities, as measured by the S&P/TSX Composite, generated a return of 17.0% for the quarter, with the majority of all sectors posting healthy gains.
U.S.equities climbed back from recent lows with the S&P 500 gaining 15.3% in CAD for the quarter.
- International developed markets, as measured by the MSCI EAFE Index, concluded the quarter with a double digit return, generating 10.1% in CAD.
- The MSCI Emerging Markets index witnessed a 13.1% return in CAD during the second quarter, with all sectors showing positive gains for the period.
The Canadian labour market felt the impact of the global pandemic in the early part of the second quarter as witnessed by the massive job losses, but as the economy progressed to re-opening, signs of job recovery gained traction by the end of the quarter. Low oil prices which led to reduced transportation costs contributed to a sharp decline in headline CPI to sub-zero level during the months of April and May. Although the housing market experienced a steep decline in April, housing starts rose sharply in May followed by an 8.3% increase in June. Within the currency market, the Canadian Dollar appreciated by approximately 4% relative to the
International markets welcomed the introduction of economic relief programs which included the European Commission’s proposal to aid the bloc’s economic recovery as well as the European Central Bank’s (ECB) expansion of the Pandemic Emergency Purchase Program (PEPP). The
As emerging markets continued to see a rise in coronavirus cases, governments steadily injected fiscal stimulus and central banks remained in accommodative mode in an effort to buffer their economies. Consistent with the actions of other central banks, The People’s
The Canadian Fixed Income market, as measured by the FTSE Canada Universe Bond Index returned 5.9% during the quarter with Corporate bonds outpacing both the Government and Provincial Segments. Long-term issuers outperformed the short and mid-term sectors. The
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