Once upon a time, Canadians couldn't invest their pension money outside the country. How things have changed, as foreign stocks led Canadian pension plans to their best quarterly return since late 2010.
A shift into equities, particularly those abroad, powered gains at pension plans. A survey from RBC Dexia Investor Services shows that Canadian defined benefit pension plans booked a 4.5 per cent return in the fourth quarter, which foreign stocks leading the way with a 9.9 per cent median return.
Pension plans also did well in Canada, managing to outperform the broader market. While the country's benchmark stock index rose 4.4 per cent, pension plans' Canadian stock holdings rose 5.6 per cent.
Meanwhile, bonds were the laggards. Fixed income investments dropped 0.2 per cent.
“The appetite for equities gained steam, reflecting a renewed sense of tempered optimism and the continued need for pension plans to seek higher returns through increased equity allocation,” Scott MacDonald, Head, Pensions, Insurance, Financial Institutions Segments for RBC Dexia, said in a press release.