Resource sectors steady Canadian pensions as tech slump tests risk budgets
Canadian defined benefit plans squeezed out a 0.4 percent median return in Q1 2026, as a powerful 30.1 percent rally in Energy and a solid gain in Materials battled against a 22.5 percent slide in Information Technology, according to RBC Investor Services (RBCIS).
Canadian pension plans “faced a challenging three months” with “sharp divergence in sector returns,” said Isabelle Tremblay, director, client solutions and asset owner lead at RBCIS.
She said weak technology holdings were partly offset by gains in Canadian energy and materials, which provided “crucial downside protection” and moderated losses versus a purely international portfolio.
Canadian equity allocations returned 3.9 percent and kept pace with the TSX Composite Index.
Within that, Energy led performance with a 30.1 percent jump following the Strait of Hormuz closure, while Materials ended the quarter up 10.7 percent after a strong start and a notable pullback in March.
Information Technology moved in the opposite direction: heavy losses in January and February, followed by only a partial rebound in March, left the sector down 22.5 percent for the period and a key drag on plan results.
Outside Canada, client plans’ global equity allocations returned -0.9 percent, beating the MSCI World Index’s 1.8 percent decline as active management and tactical positioning helped cushion losses.
US equities, as measured by the S&P 500 Index, fell 2.6 percent, with the tech selloff again a major factor.
Style dispersion was pronounced: MSCI World Value gained 3.0 percent, while MSCI World Growth dropped 6.8 percent.
Emerging markets returned 1.6 per cent for the quarter (MSCI Emerging Markets Index), but that modest figure hid sharp swings, from AI-fuelled gains in Taiwan and Korea to an 11 per cent March selloff as the Middle East conflict raised energy costs for energy‑importing countries.
Fixed income provided little offset.
Client plans’ bond allocations returned 0.2 percent in Q1, in line with the FTSE Canada Universe Bond Index.
Bonds across the curve advanced in January and February before giving back ground in March on renewed inflation worries.
Long-term bonds saw the steepest reversal, dropping 3.6 percent in March and ending the quarter flat.
The Bank of Canada held its overnight rate at 2.25 percent throughout the period, signalling caution as it weighed conflicting signals from inflation and growth.
