Ms. Isabelle Tremblay reports

RBC INVESTOR SERVICES' CANADIAN PENSION PLANS NEAR FLAT IN Q2 2024

Royal Bank of Canada's RBC Investor Services had a positive return of 1.1 per cent for its clients' defined pension plans during the second quarter of 2024, and a 4.4-per-cent return for the first half of 2024. This analysis, which RBCIS reports on following each quarter, encompasses various client plans across private and public sectors.

Global equities for client plans generated gains of 3.1 per cent, slightly underperforming the MSCI World Index, which returned 3.8 per cent and was led by the information technology (12.6 per cent) and communication services (9.3 per cent) sectors. Similar to first quarter, growth-style stocks outpaced their value counterparts with the MSCI World Growth up 7.5 per cent compared with MSCI World Value -- 0.1 per cent. From a regional perspective, U.S. equities outperformed their international counterparts, as evidenced by the S&P 500's gain of 5.4 per cent, primarily driven by the robust performance of the information technology sector versus the MSCI EAFE's 0.7-per-cent return.

Canadian equities for RBCIS DB pension plans lagged their global counterparts and experienced a negative return of 0.6 per cent, aligning with the TSX Composite Index's -- a 0.5-per-cent return. Weakness in the financials (negative 1.2 per cent) and industrials (negative 3.4 per cent) sectors overshadowed gains in the materials (positive 7.4 per cent) sector.

Turning to the Canadian fixed-income asset class, RBCIS DB pension plans returned 0.8 per cent aligning with the FTSE Canada Universe Bond Index, which experienced a return of 0.9 per cent, rebounding from its negative return in first quarter, primarily due to the Bank of Canada's interest rates adjustment in June. Short-term FTSE Canada Universe bonds (1.2 per cent) outperformed long-term bonds that remained nearly flat with a 0.2-per-cent return.

"This analysis emphasizes the complexities of the Canadian pension landscape, and the importance of diversifying, and pro-active risk management," said Isabelle Tremblay, director, client solutions, asset owner segment lead, at RBCIS. "The market continues to experience volatility due to ongoing geopolitical tensions. Inflation trended favourably in [second quarter] 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."

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