Unstable market and tariffs weakened sentiment but resilience endured
The first quarter of the year tested the mettle of investment managers at Canada’s largest pension plans, but they won in the end to boost funds for retirees.
The median return for the quarter was 1.25% according to the BNY Canadian Asset Strategy View universe. It adds to an impressive 9.21% one-year median return at March 31, 2025, outperforming the median 10-year annualized return of 6.46%.
The results are based on an analysis of pension plans with $328 billion in aggregate assets, with the average plan size of $4.8 billion.
"Despite challenging market conditions and shifting investor sentiment in Q1 amplified by the US presidential transition and the tariff concerns, Canadian pension plans delivered positive returns, demonstrating continued resilience." said David Cohen, Director of Global Risk Solutions, BNY.
International equities were the best-performing asset class in Q1 2025, posting a quarterly median return of 3.67% while US equities were the worst performers with a negative -4.21% median return. Canadian Equity posted a median return of 0.48% in the first quarter, behind the S&P/TSX Composite Index return of 1.51%.
The Canadian Fixed Income median return was 1.91% in the first quarter of 2025. Fixed Income lagged relative to the FTSE Canada Universe Bond Index for the quarter, which returned 2.02%.
"Outside of US equities, which experienced a sharp selloff, most equity markets generated positive returns,” added Cohen. “Meanwhile, declining fixed income yields offered a measure of safety amid rising trade tensions. Stable private asset performance further supported Canadian plan sponsors in navigating public market volatility.”
For alternative assets, private equity delivered the strongest performance (1.57%), hedge funds ended the quarter with a median return of 1.17% while Real Estate delivered a 0.56% quarterly return.
Recent reports from Mercer and Aon also highlighted the strength of Canadian pension plans.
