Northern Trust Pension Universe Data: Canadian Pension Plans Weathered Volatility in Q4 2024, Concluding the Quarter and Year With Positive Returns
Canadian pension plans demonstrated resilience in Q4 2024, achieving a 1.5% median advance and a robust 10.6% return for the full year, according to the Northern Trust Canada Universe. The quarter was characterized by mixed market performance amid economic shifts and geopolitical tensions.
Canadian equities (S&P/TSX Composite Index) gained 3.8% in Q4 and 21.7% for the year, with Information Technology leading both periods. U.S. equities (S&P 500) rose 9.0% in CAD for Q4 and 36.4% for the year. International markets faced challenges, with the MSCI EAFE Index declining 2.1% in Q4 but gaining 13.8% for the year.
The Bank of Canada cut interest rates by 50 basis points to 3.25% in December, while the Federal Reserve implemented a 25-basis-point cut to 4.25-4.50%. The Canadian Fixed Income market remained flat for the quarter, with corporate bonds showing positive returns while Federal and Provincial bonds declined.
I piani pensionistici canadesi hanno dimostrato resilienza nel quarto trimestre del 2024, registrando un avanzamento mediano dell'1,5% e un robusto ritorno del 10,6% per l'intero anno, secondo il Northern Trust Canada Universe. Il trimestre è stato caratterizzato da prestazioni di mercato miste a fronte di cambiamenti economici e tensioni geopolitiche.
Le azioni canadesi (S&P/TSX Composite Index) hanno guadagnato il 3,8% nel quarto trimestre e il 21,7% per l'anno, con la tecnologia dell'informazione che ha guidato entrambi i periodi. Le azioni statunitensi (S&P 500) sono aumentate del 9,0% in CAD nel quarto trimestre e del 36,4% per l'anno. I mercati internazionali hanno affrontato sfide, con l'Indice MSCI EAFE in calo del 2,1% nel quarto trimestre ma in aumento del 13,8% per l'anno.
La Banca del Canada ha tagliato i tassi d'interesse di 50 punti base portandoli al 3,25% a dicembre, mentre la Federal Reserve ha attuato un taglio di 25 punti base portandoli a 4,25-4,50%. Il mercato obbligazionario canadese è rimasto stabile per il trimestre, con le obbligazioni societarie che hanno mostrato ritorni positivi mentre le obbligazioni federali e provinciali sono diminuite.
Los planes de pensiones canadienses demostraron resiliencia en el cuarto trimestre de 2024, logrando un avance mediano del 1.5% y un robusto retorno del 10.6% para el año completo, según el Northern Trust Canada Universe. El trimestre se caracterizó por un rendimiento mixto del mercado en medio de cambios económicos y tensiones geopolíticas.
Las acciones canadienses (Índice S&P/TSX Composite) aumentaron un 3.8% en el cuarto trimestre y un 21.7% en el año, con la Tecnología de la Información liderando ambos períodos. Las acciones estadounidenses (S&P 500) subieron un 9.0% en CAD en el cuarto trimestre y un 36.4% en el año. Los mercados internacionales enfrentaron desafíos, con el índice MSCI EAFE cayendo un 2.1% en el cuarto trimestre, pero ganando un 13.8% en el año.
El Banco de Canadá recortó las tasas de interés en 50 puntos básicos, llevándolas al 3.25% en diciembre, mientras que la Reserva Federal implementó un recorte de 25 puntos básicos a 4.25-4.50%. El mercado de renta fija canadiense se mantuvo estable durante el trimestre, con los bonos corporativos mostrando rendimientos positivos mientras que los bonos federales y provinciales disminuyeron.
캐나다 연금 계획은 2024년 4분기에 1.5%의 중간 상승률과 전체 연도 10.6%의 강력한 수익률을 달성하며 탄력성을 보여주었습니다. 이는 Northern Trust Canada Universe에 따른 것입니다. 이 분기는 경제 변화와 지정학적 긴장 속에서 혼합된 시장 성과로 특징지어졌습니다.
캐나다 주식 (S&P/TSX 종합지수)는 4분기에 3.8%, 연간 21.7% 상승했으며, 정보 기술 부문이 두 기간 모두에서 선두를 달렸습니다. 미국 주식 (S&P 500)은 4분기에 CAD 기준 9.0%, 연간 36.4% 상승했습니다. 국제 시장은 도전에 직면했으며, MSCI EAFE 지수는 4분기에 2.1% 하락했으나 연간 13.8% 상승했습니다.
캐나다 중앙은행은 12월에 기준 금리를 50bp 인하해 3.25%로 조정했고, 미국 연방준비제도는 25bp 인하하여 4.25-4.50%로 조정했습니다. 캐나다 고정 수익 시장은 분기 동안 변동이 없었으며, 기업 채권은 긍정적인 수익을 나타낸 반면 중앙 및 지방 채권은 하락했습니다.
Les régimes de retraite canadiens ont démontré leur résilience au quatrième trimestre de 2024, enregistrant une avancée médiane de 1,5% et un retour robuste de 10,6% pour l'année entière, selon le Northern Trust Canada Universe. Ce trimestre a été caractérisé par des performances de marché contrastées au milieu de changements économiques et de tensions géopolitiques.
Les actions canadiennes (indice S&P/TSX Composite) ont gagné 3,8% au quatrième trimestre et 21,7% sur l'année, avec les technologies de l'information en tête de ces deux périodes. Les actions américaines (S&P 500) ont augmenté de 9,0% en CAD au quatrième trimestre et de 36,4% pour l'année. Les marchés internationaux ont affronté des défis, l'indice MSCI EAFE ayant reculé de 2,1% au quatrième trimestre, mais progressé de 13,8% pour l'année.
La Banque du Canada a réduit les taux d'intérêt de 50 points de base pour atteindre 3,25% en décembre, tandis que la Réserve fédérale a mis en œuvre une réduction de 25 points de base, atteignant 4,25-4,50%. Le marché des obligations canadiennes est resté stable pendant le trimestre, les obligations d'entreprise affichant des rendements positifs tandis que les obligations fédérales et provinciales ont diminué.
Kanadische Pensionspläne haben im 4. Quartal 2024 Resilienz gezeigt und einen medianen Anstieg von 1,5% sowie eine robuste Rendite von 10,6% für das gesamte Jahr erzielt, so das Northern Trust Canada Universe. Das Quartal war geprägt von gemischten Marktbewegungen inmitten wirtschaftlicher Veränderungen und geopolitischer Spannungen.
Kanadische Aktien (S&P/TSX Composite Index) stiegen im 4. Quartal um 3,8% und um 21,7% im Jahr, mit Informationstechnologie, die beide Perioden anführte. US-Aktien (S&P 500) stiegen im 4. Quartal um 9,0% in CAD und um 36,4% im gesamten Jahr. Internationale Märkte standen vor Herausforderungen, wobei der MSCI EAFE Index im 4. Quartal um 2,1% fiel, aber im Jahr um 13,8% gewann.
Die Bank von Kanada senkte die Zinssätze im Dezember um 50 Basispunkte auf 3,25%, während die Federal Reserve eine Senkung um 25 Basispunkte auf 4,25-4,50% vornahm. Der canadische Markt für festverzinsliche Wertpapiere blieb im Quartal stabil, wobei Unternehmensanleihen positive Erträge erzielten, während Bundes- und Provinzanleihen zurückgingen.
- Pension plans achieved 10.6% annual return
- Canadian equities gained 21.7% for the year
- U.S. equities returned 36.4% (CAD) annually
- Information Technology sector led performance with double-digit returns
- Corporate bonds showed positive returns in Q4
- International markets declined 2.1% in Q4
- Federal and Provincial bonds declined in Q4
- Economic growth showed signs of slowing
- Annual inflation rose for third consecutive month to 2.9%
Insights
The Q4 2024 pension performance data reveals several important insights for institutional investors. The 10.6% annual return achieved by Canadian pension plans demonstrates remarkable resilience amid complex market conditions, particularly noteworthy given the challenging monetary policy environment.
Several key trends emerged that warrant attention:
- The divergence between North American and international market performance highlights the importance of geographic diversification in pension portfolios
- Technology sector leadership across multiple regions suggests a structural shift in market dynamics
- The flat bond market performance, despite significant yield curve movements, indicates effective duration management by pension funds
The synchronized monetary policy shifts across major central banks - including the BoC's 50 basis point cut and the Fed's 25 basis point reduction - created a supportive environment for risk assets. However, the cautious forward guidance from central banks suggests a more nuanced approach to monetary policy in 2025, which could introduce new challenges for pension fund managers.
The political transition in the U.S., combined with ongoing global tensions, may require pension funds to reassess their risk management frameworks. The strong performance in domestic equities (21.7% annual return) provides a buffer for potential volatility, but the divergence between North American and international markets (-2.1% Q4 return for EAFE) suggests the need for careful regional allocation strategies moving forward.
Financial market performance in Q4 was marked by themes prevalent throughout 2024, including economic growth, geopolitical tensions, inflation, and monetary policy. As most central banks continued down a less restrictive path with interest rate cuts, markets shifted focus toward monetary policy guidance and tone, in particular the cautious stance from the
Canadian and
“This past year presented both challenges and opportunities as the macroeconomic environment pursued stability and normality. Whether the economic tone is one of caution or optimism, plan sponsors are adapting well as they continue to modernize frameworks and implement strategies to secure consistent growth and protection of their respective pension plan investments both now and into the future,” said Katie Pries, President and CEO of Northern Trust Canada.
The Northern Trust Canada universe tracks the performance of Canadian institutional defined benefit plans that subscribe to performance measurement services as part of Northern Trust’s asset service offerings.
Despite a wave of political frictions that surfaced during Q4, coupled with the significant up and down moves in the yield curve, the Canadian bond market concluded the quarter with a flat return. Equity markets saw mixed results, with Canadian and
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Canadian Equities, as measured by the S&P/TSX Composite Index, advanced
3.8% for the quarter and21.7% for the year. The Information Technology sector led performance for the quarter and full year, generating healthy double-digit returns over both periods. The Communications Services sector was the weakest performer for both the quarter and the year. -
U.S. Equities, as measured by the S&P 500 Index generated a9.0% gain in CAD for the quarter and a solid36.4% in CAD for the year. Consumer Discretionary, Communications Services, Information Technology and Financials sectors produced the largest gains for the quarter and the year. Real Estate, Materials and Health Care sectors recorded the weakest returns for the same periods. -
International developed markets, as measured by the MSCI EAFE Index, declined -
2.1% in CAD for the quarter and returned13.8% in CAD for the year. Communications services, Financials, and Consumer Discretionary sectors were positive performers for the quarter, while the Materials sector experienced the largest decline for the period. Financials sector led performance for the year, while the Materials and Energy sectors posted the weakest performance. -
The MSCI Emerging Markets Index fell -
1.9% in CAD for the quarter and advanced17.9% in CAD for the year. Most sectors declined during the quarter with the exception of Financials and Information Technology sectors generating positive results. The full year witnessed positive results across most sectors, except for the Materials and Consumer Staples sectors which declined over the period.
The Canadian economy exhibited signs of slowing over the fourth quarter. In response to weaker economic growth and signs of a softening labour market, the Bank of
The
International markets witnessed a decline over the quarter with the Eurozone facing sluggish growth throughout the period. The European Central Bank (ECB) opted to cut interest rates twice during the quarter, by a quarter point each time, to bring the deposit rate to
Emerging markets also observed weakness during the fourth quarter. The People’s Bank of China (PBoC) held key lending rates steady at its December fixing, with the one-year loan prime rate at
The Canadian Fixed Income market, as measured by the FTSE Canada Universe Bond Index, was flat for the quarter. Corporate bonds produced positive returns while Federal and Provincial bonds fell over the period. Short-term bonds advanced modestly over the quarter, while mid- and long-term bonds witnessed a decline.
About Northern Trust
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Camilla Greene
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Camilla_Greene@ntrs.com
Simon Ansell
+ 44 (0) 20 7982 1016
Simon_Ansell@ntrs.com
US &
John O’Connell
+1 312 444 2388
John_O’Connell@ntrs.com
Source: Northern Trust Corporation
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