Canadian Pension Assets Slip on Q2 Decline

(Reuters) – Canadian pension assets lost ground in the quarter ended June 30, falling for the first time in four quarters as global equity markets faltered, according to a survey released on Thursday by RBC Dexia Investor Services.

Within the C$340 billion ($327 billion) RBC Dexia coverage universe, Canadian pension plans lost 3.2 percent in the three months ended June 30, erasing gains in the first quarter for a net 1.4 percent decline on the year, the report said.

“After an encouraging four successful quarters of positive returns, it was difficult for Canadian pension plans to hold their ground in the second quarter,” said Don McDougall, director of advisory services at RBC Dexia.

The report said the hardest hit class for Canadian pension assets was non-Canadian equities, down 8.3 percent in the quarter.

RBC Dexia also pointed to the impact of exchange rates on equity valuations, adding that the MSCI World Index fell 11.2 percent in the quarter in local currency terms. Canadian pensions were buffered by the weakening of the Canadian dollar against most major currencies, however.

Canadian equity markets lost 5.5 percent in the quarter, the report said, with most sectors retreating. The heavyweight financials sector fell 9.8 per cent and accounted for most of the decline.

RBC Dexia Investor Services is equally owned by Canada’s largest bank, the Royal Bank of Canada (RY.TO), and Dexia (DEXI.BR), a European bank, and has US$2.3 trillion in client assets under administration.

In a separate report on Thursday, fund manager Franklin Templeton Investments said market sentiment was turning.

A survey of 1,002 Canadians conducted in the week of June 28 by Angus Reid Public Opinion showed 54 percent expect stock markets to rise.

The survey noted a change in sentiment since the market meltdown of late 2008, with investors becoming less timid and suspicious.

($1=$1.04 Canadian) (Reporting by Pav Jordan; editing by Peter Galloway)