Information technology was the clear leader which returned 12.6% while communications offered a strong 9.3%. Growth-style and US stocks outperformed with the S&P 500 returning 5.7%, again it was IT that fuelled its performance.
Canadian stocks, with a broader base, underperformed with RBCIS DB plans returning a negative -0.6%, in line with the S&P/TSX Composite’s negative -0.5% in the quarter. Financials and industrials weakened the impact of a stronger materials sector.
Fixed income fared better with a positive 0.8% return in the quarter, in line with the 0.9% return of the FTSE Canada Universe Bond Index. Bonds benefitted from the Bank of Canada’s June rate cut to reverse a negative first quarter, led by short-term FTSE Canada Universe bonds which posted 1.2% compared to 0.2% for long-term bonds.
“This analysis emphasizes the complexities of the Canadian pension landscape, and the importance of diversifying, and proactive 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 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.”
Further analysis
Meanwhile, the Northern Trust Canada Universe also highlighted a positive end to the second quarter for the DB pension plans included in its analysis.
