LifeWorks has published the results of its Performance Universe of Pension Managers' Pooled Funds
Canadian pension funds improved their financial position overall in the third quarter of 2022.
According to the newly-published Performance Universe of Pension Managers’ Pooled Funds from LifeWorks, diversified pooled fund managers posted a median return of negative 0.1% before management fees.
Amid declining markets, diversified pooled fund managers achieved above-benchmark returns, on average, in the quarter, with a median return of -0.1%, beating the benchmark used by many pension funds by 0.1% - with an allocation split of 55% equities and 45% fixed income.
“Due to the rise in interest rates used to calculate the solvency liability, the financial position of pension funds improved somewhat during the third quarter,” said Jean Bergeron, a Partner in the LifeWorks Investment and Risk Consulting team. “We estimate that the solvency ratio of a typical pension plan has increased by around 0.6% over the third quarter of 2022. Since the beginning of the year the solvency ratio of a typical pension plan has increased by about 0.1%.”
Where the gains were
Managers achieved median returns of 0.7% on bonds, outperforming the benchmark by 0.2%.
During the third quarter of 2022, short-term, mid-term and long-term bond indices posted returns of negative 0.3%, 0.8% and 1.5% respectively. The high-yield bond index posted a return 0.7%, while the real return bond index provided a 0.9% return.
For Canadian equity managers, the median return of -1.0% was 0.4% above the S&P/TSX Index.
During the third quarter of 2022, the S&P/TSX Small Cap Index dropped 2.5%, the S&P/TSX Completion Index (representing mid-cap stocks) decreased 0.1%, and the large-cap S&P/TSX 60 Index posted a return of -1.7%.
US equities managers returned a median 1.6% against 1.2% for the S&P 500 Index in Canadian dollar terms. For international equities they saw -3.6%, against 3.5% for the MSCI EAFE Index. Global equities returned -0.5% versus -0.1% for the MSCI World Index. Emerging market equities returned a median -5.2% versus -5.6% for the MSCI Emerging Markets Index.
The Dow Jones Credit Suisse Hedge Fund Index (formerly CSFB/Tremont Hedge Fund Index) posted a return of 6.8$ (C$) for the third quarter of 2022