Skip to main content
Morneau Shepell releases the results of its Performance Universe of Pension Managers' Pooled Funds for the Third Quarter of 2014
Corporate / Pension/Retirement / Canada

Morneau Shepell releases the results of its Performance Universe of Pension Managers' Pooled Funds for the Third Quarter of 2014

Positive returns for pension funds

MONTREAL, Oct. 22, 2014 /CNW/ - Morneau Shepell (TSX: MSI), the largest company in Canada offering human resources consulting and outsourcing services, has released the results of its Performance Universe of Pension Managers' Pooled Funds for the third quarter of 2014.

According to the report, in the third quarter of 2014, diversified pooled fund managers posted a median return of 0.8 per cent before management fees.

"The Canadian stock market and most foreign markets edged lower while the US stock market kept rising in the third quarter," said Jean Bergeron, partner and team leader of Morneau Shepell's Asset and Risk Management Consulting team. "A decrease in interest rates generated positive returns in the bond market. This market performance kept pension fund returns in positive territory for the quarter."

"Given the decrease in interest rates used to discount pension benefits, the solvency liability of an average pension fund was up about 3.1 per cent in the third quarter. Pension fund financial positions have thus deteriorated this quarter and since the beginning of the year," added Bergeron.

On average, during the third quarter of 2014, diversified pooled fund managers underperformed the benchmark. In fact, these managers' median return (0.8 per cent) was 0.2 per cent below the benchmark portfolio (with an allocation of 55 per cent in equity and 45 per cent in fixed income) used by many pension funds (1.0 per cent).

Canadian bonds
In the third quarter of 2014, managers obtained a median return of 1.1 per cent on bonds (Universe mandate) equal to the FTSE TMX Canada Universe Bond Index return (1.1 per cent).

During the same period, long-term bonds posted a return of 2.3 per cent, while the return for medium-term bonds was 0.8 per cent and for short-term bonds 0.4 per cent. High-yield bonds achieved a return of 0.6 per cent, while real return bonds provided a 0.9 per cent return.

Canadian equities
During the third quarter of 2014, Canadian equity managers obtained a median return of -0.7 per cent which is 0.1 per cent lower than S&P/TSX Index (-0.6 per cent).

During that same period, the S&P/TSX Small Cap Index decreased by -9.2 per cent, whereas the S&P/TSX Completion Index that represents mid-cap stocks lost -3.4 per cent, and the large-cap S&P/TSX 60 Index posted gains of 0.4 per cent.

Foreign equities
Foreign equity managers' median returns and appropriate benchmark indices for the third quarter of 2014 are as follows:

  • 4.9 per cent for U.S. equities versus 6.2 per cent for the S&P 500 Index (C$)
  • -0.8 per cent for international equities versus -1.3 per cent for the MSCI EAFE Index (C$)
  • 1.9 per cent for global equities versus 2.7 per cent for the MSCI World Index (C$)
  • 1.5 per cent for emerging markets equities versus 1.4 per cent for the MSCI Emerging Markets Index (C$)

Alternative investments
The Dow Jones Credit Suisse Hedge Fund Index (previously CSFB/Tremont Hedge Fund Index) posted a return of 5.6 per cent (C$) for the third quarter of 2014.

The Performance Universe covers about 360 pooled funds managed by nearly 50 investment management firms. The pooled funds included in the Universe have a market value of more than $250 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 and 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 largest company in Canada offering human resources consulting and outsourcing services. The Company is the leading provider of employee and family assistance programs, as well as the largest administrator of retirement and benefits plans, and (mention of position for absence management solutions). Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive position. Established in 1966, Morneau Shepell serves more than 20,000 clients ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,600 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. 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 September 30, 2014
(annualized returns beyond one year)










Diversified












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


1.83

5.21

10.45

18.01

16.64

15.45

12.24

11.60


1st quartile


1.24

4.20

9.06

16.66

15.05

13.99

10.92

10.32


Median


0.79

3.85

8.43

15.55

14.21

12.81

9.52

9.20


3rd quartile


0.39

3.19

7.80

14.84

12.84

11.98

8.58

8.16


95th percentile


-1.13

2.60

6.73

12.58

9.04

7.91

5.99

6.68


Benchmark*


1.03

4.01

8.47

14.30

11.16

10.46

8.16

7.94


Benchmark**


1.03

4.10

8.72

15.05

11.98

11.11

8.50

8.20













*     2% 91-day T-Bills. 43% FTSE TMX CANADA Universe. 27.5% S&P/TSX. 27.5% MSCI World (C$)


**  2% 91-day T-Bills. 38% FTSE TMX CANADA Universe. 30% S&P/TSX. 30% MSCI World (C$)


Returns compounded quarterly










Money market












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


0.34

0.69

1.06

1.42

1.47

1.47

1.44

1.32


1st quartile


0.32

0.62

0.93

1.27

1.25

1.25

1.27

1.14


Median


0.30

0.60

0.91

1.22

1.21

1.20

1.21

1.09


3rd quartile


0.28

0.56

0.85

1.14

1.16

1.15

1.15

1.05


95th percentile


0.26

0.51

0.76

1.03

1.05

1.05

1.07

0.94


FTSE TMX CANADA
T-Bill 91 days

0.24

0.46

0.68

0.93

0.99

0.97

0.98

0.86









Canadian bonds











3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


2.23

6.07

11.56

11.68

6.15

8.33

7.68

8.81


1st quartile


1.20

3.36

6.73

7.72

3.41

5.11

5.75

6.83


Median


1.05

3.09

6.13

6.82

2.96

4.12

4.73

5.52


3rd quartile


0.90

2.85

5.84

6.35

2.49

3.69

4.45

5.06


95th percentile


0.41

1.44

4.58

5.49

2.00

2.69

3.97

4.65


FTSE TMX CANADA Universe


1.06

3.08

5.93

6.34

2.46

3.45

4.24

4.85







Canadian bonds (Universe mandate)









3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


1.21

3.39

6.91

7.59

3.67

4.73

5.12

6.12


1st quartile


1.14

3.20

6.30

6.88

3.15

4.18

4.78

5.52


Median


1.06

3.09

6.13

6.69

2.86

3.96

4.56

5.24


3rd quartile


0.95

3.00

5.93

6.32

2.47

3.66

4.36

4.98


95th percentile


0.84

2.66

5.62

5.98

2.16

3.34

4.17

4.54


FTSE TMX CANADA Universe


1.06

3.08

5.93

6.34

2.46

3.45

4.24

4.85










Mortgages












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


1.17

2.80

4.30

5.64

4.48

4.19

4.77

5.70


1st quartile


0.97

2.47

4.00

5.22

3.97

3.84

4.48

5.29


Median


0.73

2.05

3.63

4.69

3.33

3.39

4.13

4.77


3rd quartile


0.71

1.89

3.38

4.31

3.17

3.26

4.05

4.74


95th percentile


0.70

1.77

3.18

4.01

3.04

3.16

3.98

4.71


FTSE TMX CANADA Mortgage Market

0.86

1.72

4.06

5.08

4.27

4.65

4.49

4.61








Canadian equity – Broad*










3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


2.03

8.16

13.94

24.88

22.45

19.91

13.92

14.20


1st quartile


0.14

6.55

12.52

22.09

19.32

17.24

12.00

11.19


Median


-0.65

5.64

11.37

20.80

17.07

14.83

10.04

9.73


3rd quartile


-1.51

4.65

10.57

19.23

14.95

13.55

8.38

8.64


95th percentile


-4.06

3.41

8.05

15.83

11.87

11.27

6.96

7.10


S&P/TSX


-0.59

5.79

12.20

20.38

13.56

12.07

7.94

8.67


S&P/TSX Capped

-0.59

5.79

12.20

20.38

13.56

12.07

7.94

8.67


*     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


-1.17

12.41

19.59

32.95

28.40

24.85

17.08

18.92


1st quartile


-2.86

5.15

14.13

29.37

25.41

21.49

15.40

17.02


Median


-5.01

2.77

12.07

21.75

21.00

19.48

13.24

14.37


3rd quartile


-5.67

0.40

6.28

20.08

16.58

14.43

10.56

14.21


95th percentile


-8.33

-1.89

3.93

11.34

5.64

5.95

2.84

8.22


S&P/TSX Small Cap

-9.36

-0.88

6.99

14.36

6.22

6.02

2.69

7.49


BMO Small Cap weighted

-8.82

-1.03

7.73

15.29

7.13

7.77

5.15

9.92










U.S. equity












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


7.09

8.14

15.03

33.19

31.16

27.85

21.80

19.60


1st quartile


6.02

7.15

13.33

29.51

28.90

26.77

20.24

17.02


Median


4.87

5.84

11.98

28.10

27.35

25.67

18.87

15.93


3rd quartile


3.27

4.12

9.31

24.67

25.88

23.74

17.51

15.22


95th percentile


1.17

2.02

5.33

17.99

22.72

21.92

16.64

14.28


S&P 500 (C$)


6.15

7.82

14.09

30.16

27.58

25.74

19.63

16.74







International equity (Europe and Asia)









3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


1.23

2.83

7.77

17.04

24.71

18.83

13.19

11.89


1st quartile


-0.31

0.23

4.98

14.92

21.24

18.44

11.37

9.38


Median


-0.79

-0.75

3.71

13.29

20.16

17.10

10.51

8.29


3rd quartile


-1.22

-1.93

1.90

11.53

18.78

15.98

9.70

7.60


95th percentile


-4.16

-5.54

-0.04

8.72

15.95

14.09

7.92

6.05


MSCI EAEO (C$)


-1.25

-0.81

3.73

13.34

21.06

16.33

9.72

7.43







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


4.20

5.51

10.40

23.27

31.63

25.25

17.89

15.80


1st quartile


2.90

4.01

9.24

21.63

24.91

22.42

15.93

13.81


Median


1.86

2.81

8.13

19.97

23.13

20.66

15.20

12.61


3rd quartile


-0.05

0.51

6.57

18.80

21.55

19.08

13.05

10.65


95th percentile


-1.91

-2.41

2.98

13.69

19.20

17.28

10.83

9.54


MSCI Monde (C$)


2.65

3.87

9.27

21.98

23.77

20.71

14.34

11.76










Emerging markets












3 months

6 months

9 months

1 year

2 years

3 years

4 years

5 years


5th percentile


2.74

8.13

13.52

20.60

14.33

14.83

8.56

8.16


1st quartile


2.16

5.81

10.73

16.79

12.17

12.13

5.56

8.08


Median


1.48

4.71

8.96

14.19

10.14

10.56

4.64

6.42


3rd quartile


1.07

3.92

6.71

11.92

8.50

9.36

2.77

5.62


95th percentile


-0.49

3.41

6.46

9.60

4.42

8.15

2.29

4.30


MSCI Emerging markets

1.40

4.41

8.07

13.79

9.75

10.09

3.33

5.60


























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 third 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 - Corporate

For further information: Nathan Gibson, Manager, Corporate Communications, Morneau Shepell, ngibson@morneaushepell.com, 416-390-2641