April 18, 2008 / 2:50 PM / in 10 years

Canadian pension funds lose nearly 2 percent in Q1

TORONTO (Reuters) - Investment returns at Canadian pension funds fell by an average 1.9 percent in the first quarter ended March 31 as global stock markets fell, according to a survey released on Friday.

RBC Dexia Investor Services, which keeps track of $340 billion worth of Canadian pension plans and money managers, said that Canadian pension plans lost ground for the third consecutive quarter, and have now lost 2.7 percent in the latest 12-month rolling period.

The Canadian stock market fell 2.8 per cent in the first quarter, although strong prices for gold and crude oil mitigated the decline -- Canadian materials stocks gained 7.3 percent and energy was up 1.2 per cent.

However, few Canadian pension plans benefited from these pockets of strength, RBC Dexia said.

“Unfortunately, Canadian pensions had generally reined in their exposure to both growth sectors and underperformed the S&P TSX Composite Index by 1.6 percent this quarter,” Don McDougall, director of advisory services, said in a statement.

Global equity was the hardest-hit asset class in the first three months of 2008, but a weaker Canadian dollar softened the blow for pension funds that do not hedge currency exposure.

Canadian bonds were the best quarterly performer with a 2.8 percent rise, said the company, which offers global custody, administration and other services to institutional investors.

Reporting by Lynne Olver

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