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Morneau Shepell releases the results of its Performance Universe of Pension Managers' Pooled Funds

Positive returns for pension funds in first quarter of 2019

TORONTO, April 29, 2019 /CNW/ - Morneau Shepell (TSX: MSI) has released the results of its Performance Universe of Pension Managers' Pooled Funds for the first quarter of 2019.

According to the report, in the first quarter of 2019, diversified pooled fund managers posted a median return of 8.3 per cent before management fees.

"The FTSE Canada Universe Bond index posted a return of 3.9 per cent and the Canadian Equity S&P/TSX Composite index posted a return 13.3 per cent. The U.S. Equity S&P 500 index posted a return of 13.6 per cent in U.S. dollars and a return of 11.3 per cent in Canadian dollars due to the appreciation of the Canadian dollar versus the U.S. dollar. The MSCI World (Developed Markets) index obtained a return of 10.0 per cent and the MSCI Emerging Markets index posted a return of 7.6 per cent (both in Canadian dollars)," said Jean Bergeron, vice-president responsible for the Morneau Shepell Asset & Risk Management consulting team.

"Pension fund solvency liability was up during the quarter due to a decrease in interest rates. However, given the high returns for the period, pension fund financial positions on a solvency basis improved. The solvency ratio for a pension plan with an average maturity has improved by about 1.5 to 3.0 percent since the beginning of the year," added Bergeron.

During the first quarter of 2019, diversified pooled fund managers obtained a median return of 8.3 per cent, which was 0.4 per cent under the benchmark portfolio (with an allocation of 55 per cent in equity and 45 per cent in fixed income) used by many pension funds.

Canadian bonds
In the first quarter of 2019, managers obtained a median return of 3.9 per cent on bonds (Universe mandate), which was equal to the benchmark index.

Since the beginning of 2019, short-term, mid-term and long-term bond indices posted returns of 1.7 per cent, 3.8 per cent and 6.9 per cent respectively. High-yield bond index posted 4.0 per cent, while real return bond index provided a 5.1 per cent return.

Canadian equities
In the first quarter of 2019, the median return for Canadian equity managers was 12.2 per cent, which is 1.1 per cent lower than the 13.3 per cent posted by the S&P/TSX Index.

Since the beginning of 2019, the S&P/TSX Small Cap Index has risen by 10.7 per cent, whereas the S&P/TSX Completion Index representing mid-cap stocks registered an increase of 15.8 per cent, and the large-cap S&P/TSX 60 Index grew by 12.5 per cent.

Foreign equities
Foreign equity managers' median returns and appropriate benchmark indices' returns for the first quarter of 2019 are as follows:

  • 11.1 per cent for U.S. equities versus 11.3 per cent for the S&P 500 Index (C$);
  • 8.1 per cent for international equities versus 7.6 per cent for the MSCI EAFE Index (C$);
  • 9.4 per cent for global equities versus 10.0 per cent for the MSCI World Index (C$);
  • 8.2 per cent for emerging markets equities versus 7.6 per cent for the MSCI Emerging Markets Index (C$).

Alternative investments

The Dow Jones Credit Suisse Hedge Fund Index (formerly CSFB/Tremont Hedge Fund Index) posted a return of 1.9 per cent (C$) for the first quarter of 2019.

The Performance Universe covers about 302 pooled funds managed by nearly 51 investment management firms. The pooled funds included in the Universe have a market value of more than $525 billion.

The results of Morneau Shepell's study are based on the returns provided by leading portfolio managers, ranging from independent investment management firms to insurance companies, trust companies and financial institutions. The returns are calculated before deduction of management fees.

The quarterly Performance Universe results are produced by the Asset & Risk Management consulting team at Morneau Shepell. This team provides independent consulting services on all aspects of asset and liability management of pension funds, endowment funds, and other institutional investment funds.

About Morneau Shepell Inc.
Morneau Shepell is the leading provider of technology-enabled HR services that deliver an integrated approach to well-being through our cloud-based platform. Our focus is providing everything our clients need to support the mental, physical, social and financial well-being of their people. By improving lives, we improve business. Our approach spans services in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement and benefits consulting, actuarial and investment services. Morneau Shepell employs almost 5,000 employees who work with some 24,000 client organizations that use our services in 162 countries. Morneau Shepell is a publicly traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.




Summary



Rates of return for periods ending March 31, 2019
(annualized returns beyond one year)

Diversified












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


9.48

4.52

5.19

8.85

7.96

9.11

6.97

8.71


1st quartile


8.75

3.41

4.03

7.20

6.49

8.18

5.93

7.39


Median


8.25

2.33

3.05

6.06

5.33

7.37

5.47

6.57


3rd quartile


7.67

1.48

1.56

4.25

4.69

6.91

4.85

6.15


95th percentile


5.81

-0.66

0.09

2.55

2.79

5.69

4.04

5.33


Benchmark*


8.67

4.17

3.94

6.94

5.93

7.53

5.02

6.77


Benchmark**


8.98

3.88

3.78

6.98

6.03

7.88

5.21

6.92













*     45% fixed income,55% equity


**   40% fixed income,60% equity


Returns compounded quarterly

Money market












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


1.59

2.95

3.04

3.40

1.86

1.88

1.63

2.00


1st quartile


0.57

1.13

1.60

2.03

1.64

1.43

1.33

1.32


Median


0.54

1.05

1.51

1.96

1.57

1.36

1.25

1.24


3rd quartile


0.51

1.01

1.40

1.80

1.45

1.27

1.17

1.17


95th percentile


0.47

0.94

1.34

1.70

1.33

1.12

1.01

1.02

Canadian bonds











3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


7.52

8.98

6.38

7.54

6.30

6.30

4.43

6.53


1st quartile


4.56

5.95

5.05

5.61

3.86

4.01

3.18

4.47


Median


4.14

5.66

4.82

5.35

3.55

3.22

2.65

4.06


3rd quartile


3.79

5.08

4.58

5.14

3.33

3.02

2.42

3.81


95th percentile


3.42

3.05

3.35

3.82

2.97

2.32

2.17

3.49

Canadian bonds (Universe mandate)









3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


4.56

6.13

5.15

5.71

3.89

3.86

3.02

4.39


1st quartile


4.17

5.83

4.95

5.49

3.64

3.22

2.64

4.07


Median


3.95

5.66

4.82

5.34

3.43

3.11

2.48

3.90


3rd quartile


3.77

5.52

4.66

5.22

3.29

2.87

2.39

3.78


95th percentile


3.57

4.84

4.24

4.71

3.06

2.60

2.19

3.66
















 


Rates of return for periods ending March 31, 2019
(annualized returns beyond one year)

Canadian equity – Broad*










3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


13.37

6.01

5.67

12.25

7.71

10.83

7.46

8.65


1st quartile


12.97

2.33

2.09

8.72

6.05

9.57

6.42

6.95


Median


12.17

1.06

0.92

7.09

5.10

8.90

5.14

6.10


3rd quartile


11.19

-0.88

-0.87

4.47

3.38

7.98

4.44

4.90


95th percentile


7.32

-5.78

-6.93

-1.83

1.40

5.71

3.62

3.32


S&P/TSX


13.29

1.84

1.26

8.11

4.86

9.26

5.07

5.44


S&P/TSX Capped


13.29

1.84

1.26

8.11

4.86

9.26

5.07

5.44


*     Some funds may include up to 30% in foreign content

Canadian equity - Specialized










3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


13.69

-1.75

2.27

6.26

4.55

9.67

9.12

10.15


1st quartile


12.50

-4.21

-3.33

1.05

1.53

7.90

6.73

5.52


Median


11.21

-5.62

-7.13

-3.72

0.39

4.54

2.85

3.49


3rd quartile


8.79

-7.73

-8.18

-4.04

-3.28

2.99

0.79

1.54


95th percentile


3.03

-14.24

-17.82

-14.15

-7.98

0.13

-2.27

-2.81


S&P/TSX Small Cap


10.71

-5.22

-7.88

-1.81

-4.22

5.91

2.88

0.22


BMO Small Cap weighted


11.28

-5.67

-6.75

-1.28

-3.14

6.80

3.13

0.75

U.S. equity












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


14.13

7.56

14.41

21.76

18.13

18.78

15.07

18.62


1st quartile


12.54

3.67

10.81

17.13

14.45

16.74

12.51

15.74


Median


11.08

2.48

8.33

13.73

12.45

14.72

11.17

14.38


3rd quartile


9.39

1.19

6.87

12.21

10.44

13.46

10.24

13.58


95th percentile


8.20

-0.66

2.05

8.99

7.90

11.81

8.95

12.09


S&P 500 (C$)


11.32

1.46

7.43

13.48

11.99

14.59

11.95

15.19













 

Rates of return for periods ending March 31, 2019
(annualized returns beyond one year)

International equity (Europe and Asia)









3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


10.88

2.72

3.05

6.05

10.98

12.05

9.68

10.56


1st quartile


8.98

1.79

1.64

2.08

6.97

10.04

6.79

8.83


Median


8.05

0.27

-0.58

-0.34

5.70

8.36

5.38

7.20


3rd quartile


7.00

-2.78

-3.85

-3.61

4.53

7.15

4.39

6.29


95th percentile


5.03

-4.83

-7.55

-7.49

2.50

6.63

3.18

4.52


MSCI EAFE (C$)


7.57

-0.58

-0.99

-0.23

5.23

8.43

4.54

6.31

Global equity (U.S.A., Europe and Asia)









3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


14.63

6.54

9.32

14.49

16.99

16.78

13.00

14.56


1st quartile


11.42

3.50

6.00

10.67

10.99

13.16

10.38

12.05


Median


9.36

1.27

4.43

7.34

8.71

11.40

8.76

10.68


3rd quartile


8.12

-1.00

1.50

3.07

5.93

10.10

7.34

9.95


95th percentile


6.01

-5.19

-5.44

-2.33

4.32

8.36

5.60

7.43


MSCI World (C$)


10.02

0.66

3.83

7.78

8.79

11.88

8.40

10.93

Emerging markets












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


11.27

8.13

7.46

1.82

10.68

16.44

10.08

11.61


1st quartile


10.20

7.04

5.16

-1.04

9.98

14.56

8.37

10.34


Median


8.19

5.86

2.11

-3.61

8.05

12.81

7.52

9.05


3rd quartile


5.64

4.64

1.19

-4.89

5.93

10.41

6.55

8.31


95th percentile


3.08

2.24

-0.22

-6.96

2.69

6.68

4.84

6.19


MSCI Emerging markets


7.55

5.24

2.43

-3.69

8.04

12.29

6.30

8.11

























 

The information herein has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does Morneau Shepell Asset & Risk Management Ltd. ("MS ARM") or its affiliates ("Morneau Shepell") assume any responsibility or liability. MS ARM or Morneau Shepell is not liable for any errors or omissions in the information or for any loss or damage suffered. Where such statements are based in whole or in part on information provided by fourth parties, they are not guaranteed to be accurate or complete. The information does not provide individual financial, legal, tax or investment advice and is for information purposes only.

SOURCE Morneau Shepell Inc.

For further information: Heather MacDonald, Manager, Corporate Communications, 416.390.2625, media@morneaushepell.com; Jean Bergeron, FSA, FCIA, CFA, Vice-president, Asset and Risk Management, 514.392.7852, jbergeron@morneaushepell.com