Canadian Pension Funds Return 0.9% in Q3 | Chief Investment Officer

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%.

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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.

Tags: Canada, Pension, Returns

The UK’s Financial Conduct Authority (FCA) reported that 3.32 million complaints were made to financial firms in the first half of 2017, up from 3.04 million in the second half of 2016. The total redress paid to consumers was £1.99 billion ($2.64 billion) in the first half of 2017, compared to £1.97 billion during the same period in 2016.

According to the FCA, 97% of the complaints were directed at 226 firms, which received 500 or more complaints each. During the first half of 2016, 2.06 million complaints were reported by 2,796 firms, compared with 3.32 million complaints being reported by 3,160 firms during the first half of 2017.

The FCA said the increase from the previous year was significantly influenced by the changes the organization made regarding the reporting of complaints. Since June 2016, firms have been required to report data in a new way that has increased the number of complaints reported.

“We now require firms to report all complaints which gives us a fuller picture of where the industry might not be meeting customer needs,” said Christopher Woolard, the FCA’s executive director of strategy and competition, in a statement. “But even allowing for the change in reporting rules, and some progress made, the numbers are still significant.”

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Payment protection insurance (PPI) not only continues to be the most-complained-about product, garnering one-third of all complaints in the first half of 2017, but it also saw the sharpest rise in complaints among products. The total number of PPI complaints increased by 24% to 1.11 million in the first half of 2017, from 899,000 during the second half of 2016.

“Our analysis suggests this is a real increase since the first half of 2016, when 934,965 were received,” said the FCA in its report. “Because few PPI complaints are resolved by the end of the next business day, the volume of PPI complaints is unlikely to be impacted by the changes in the new return.”

PPI is insurance that helps cover monthly repayments on mortgages, loans, credit cards, store cards, or catalogue payments if the holder of the insurance is unable to work due to illness, accident, death, or unemployment.

After PPIs, the next most-complained-about products were current accounts, with more than 518,000 complaints, and credit cards, with nearly 310,000 complaints. The FCA said although complaints about these products have increased since the first half of 2016, the change is not a meaningful comparison, as the new reporting changes are likely to have affected these products.

Some 43% of all complaints made during the first half of 2017 were related to “advising, selling and arranging,” which is down from 59% in the first half of 2016, while “general administration and customer service” accounted for 38% of all complaints, up from 27% of all complaints in the first half of 2016.

Tags: Financial Conduct Authority, Payment protection insurance, UK