A strong stock performance helped Canadian pension plans earn an average return of more than 10 per cent in 2010 and most have now more than made up investment losses suffered in the financial crisis, says a survey by RBC Dexia Investor Services.
Pension assets gained 4.3 per cent in the quarter ended in December, resulting in a 10.4 per cent improvement for the year.
This marked the second consecutive year of double-digit returns for plans surveyed by RBC Dexia, which have total combined assets of $340-billion.
Despite the volatility of global markets over the past decade, Canadian pension plans have achieved an average annualized return of 5.4 per cent, RBC Dexia said Friday.
Fay Coroneos, global head of risk and investment analytics, said the lesson of the last decade is that diversification and disciplined investing is key in the long run.
Canadian equity markets flourished, with nine of 10 TSX sectors enjoying double-digit annual gains.
Despite the improvement, Canadian pension plans underperformed the index by 0.4 per cent.
Foreign equities increased 6.3 per cent in 2010, but were muted by the soaring loonie, which had one of the best performances among major currencies.
Domestic bond holdings within Canadian pension plans increased 7.89 per cent, surpassing the DEX Universe index by 1.1 per cent.
Canada's largest pension fund manager, the Caisse de depot et placement du Quebec, declined to say whether its results beat the average in 2010.
The large investment group will announce its annual results some time between mid February and mid-March. Its assets grew by 10 per cent in 2009 to $131.6-billion, following a disastrous year in 2008.
The Caisse's rate of return was bested in 2009 by pension plan peers such as the Canada Pension Plan Investment Board, the Ontario Teachers Pension Plan and the Ontario public-sector pension manager known as OMERS.