RBC DB plans rise in Q1 as euro strength, sector mix and market volatility shape results
RBC Investor Services reported that defined benefit (DB) pension plans posted a 1.1 percent gain in the first quarter of 2025.
The performance occurred against a backdrop of global and domestic political changes, shifting trade dynamics and geopolitical instability.
The results are based on an analysis of RBC’s client pension plans across both public and private sectors.
Canadian equities returned 1.2 percent for DB plans, falling slightly short of the TSX Composite Index’s 1.5 percent rise. The 20.3 percent surge in the materials sector, driven by strong gold stock performance, led gains.
However, the information technology sector dropped 7.5 percent, reflecting challenges across the tech industry.
Foreign equity holdings slipped 0.1 percent for plans, compared to a 1.7 percent decline in the MSCI World Index.
A divide between stock types emerged: the MSCI World Value Index gained 4.9 percent, while the MSCI World Growth Index lost 7.7 percent.
US equities, tracked by the S&P 500, fell 4.2 percent, underperforming the MSCI EAFE Index, which increased 6.9 percent.
European markets—especially Germany—led the EAFE gains, with fiscal stimulus prospects and the euro’s appreciation against the Canadian dollar boosting returns.
Emerging markets also made gains, as the MSCI Emerging Markets Index rose 3.0 percent.
Fixed income assets in pension portfolios returned 1.8 percent, slightly under the FTSE Canada Universe Bond Index’s 2.0 percent gain.
Mid-term bonds outperformed with a 2.7 percent increase, as investors turned to safer assets amid uncertainty over central bank actions and political transitions.
“The first quarter reminded us that sector positioning, currency exposure and geopolitical awareness are key to pension performance,” said Isabelle Tremblay, asset owner segment lead at RBC Investor Services.
She added that the euro’s appreciation against the Canadian dollar amplified foreign equity gains. Political developments, including leadership changes both in Canada and abroad, also prompted investor recalibration.
Tremblay noted that diversified and nimble pension plans were better able to navigate these challenges.
