Canada’s diversified pooled fund managers reported a median return of 0.9% before management fees for the third quarter, easily outperforming the benchmark portfolio of 0.1%, according to a report from human resources, consulting, and technology company Morneau Shepell.
Since the beginning of the year, the median pension fund return was 4.6%, compared to 4.3% for the benchmark portfolio.
“The recovery of the energy sector had a positive impact on the Canadian stock market during the quarter,” said Jean Bergeron, managing partner of Morneau Shepell’s asset management practice.
The report said emerging market equities outperformed other major global indices over the last three quarters. The MSCI Emerging Markets Index returned 7.7% in local currency, the US equity market represented by the S&P 500 Index rose 4.5% in local currency, and the international equity market represented by the MSCI EAFE returned 3.4%.
Funds reported a median loss of 1.7% on bonds in Q3, which was 0.1% higher than the benchmark, according to the report. During the same period, long-term bonds lost 4.1%, while medium-term bonds lost 1.8%, and short-term bonds fell 0.5%. High-yield bonds returned 2.3%, while real return bonds declined 3%. Since the beginning of 2017, the report said Canadian funds earned a median return of 0.8% on bonds, which was 0.3% higher than the benchmark.
Morneau Shepell said the median return for Canadian equity managers was 3.3% during Q3, which was 0.4% lower than the 3.7% gained by the S&P/TSX Index. During the same period, the S&P/TSX Small Cap Index increased by 2.4%, while the S&P/TSX Completion Index representing mid-cap stocks rose by 2.8%, and the large-cap S&P/TSX 60 Index was up 4%.,
The report covers approximately 320 pooled funds managed by nearly 50 investment management firms that have a market value of more than C$243 billion ($190 billion). The results are based on the returns provided by portfolio managers, ranging from independent investment management firms to insurance companies, trust companies, and financial institutions. The returns are calculated before deduction of management fees.