The median return of the BNY Mellon Canadian Master Trust Universe, a BNY Mellon Global Risk Solutions fund-level tracking service, was -3.21% for the fourth quarter of 2018, amid disappointing global market performance. This marks the first quarter of negative returns following 10 consecutive quarters of positive results. The 2018 median return was -0.35%, while the median 10-year annualized return was +8.68%.
The BNY Mellon Canadian Master Trust Universe results are based on $227.1 billion worth of investment assets in Canadian investment plans, with the average plan size of $2.7 billion. The Universe is designed to provide peer comparisons by plan type and size, and it comprises 83 Canadian corporate, public and university pension plans. Additional insight into the plan results is provided by BNY Mellon's Asset Strategy View, and the Universe product extension, Asset Allocation Trust Universes.
"Financial markets around the globe experienced a difficult fourth quarter, with volatility and negative returns recorded across all equity segments. Canadian investment plans greater than $1 billion in assets under management achieved the highest performance, posting a median return in the fourth quarter of 2018 at -2.85%, and a one-year return of +0.05% for 2018," said Catherine Thrasher, Strategic Client Solutions and Global Risk Solutions, CIBC Mellon and BNY Mellon. "All equity asset classes posted dramatic declines for the quarter, as investors worried about a looming global economic slowdown."
Canadian Foundations and Endowments posted the lowest median return of -4.62% in the fourth quarter of 2018 and -1.49% this past year. Canadian Equity was the poorest performing asset class with a median quarterly return of -9.76%. U.S. Equity median returns followed, returning -8.54%. International and Non-Canadian Equity median returns were -6.78% and -7.50%, respectively. Amid overwhelming economic uncertainty, the Canadian Fixed Income market achieved positive results during the final quarter of 2018. Fixed Income median performance was positive, with a return of +1.62% in the fourth quarter of 2018 and a one-year return of +1.19% for 2018.
Q4 2018 Highlights of the BNY Mellon Canadian Master Trust Universe
• Median returns for Canadian plans over $1 billion outperformed the median return of the BNY Mellon Canadian Master Trust Universe by 36 basis points for Q4 2018.
• Canadian Foundations and Endowments trailed among plans for the fourth quarter of 2018, posting negative median performance of -4.62%. Canadian Universities were ahead slightly, with a less negative return of -4.15%.
• Equity segment returns were poor this quarter, displaying negative performance across the board. Canadian Equity posted the lowest quarterly median return of -9.76%, but ended ahead of the S&P/TSX Composite Index return of -10.11%. The U.S. Equity median quarterly return was -8.54%, only slightly ahead of the S&P 500 Index result of -8.62%. International Equity and Non-Canadian Equity also performed poorly, with respective median corresponding returns of -6.78% and -7.50%. However, these results finished ahead of the MSCI EAFE Index and MSCI World Index returns of -7.54% and -8.40% respectively.
• Further insight from the BNY Mellon Asset Allocation Trust Universes indicate that Emerging Markets Equity posted a negative median return for the quarter of -1.54%, while outperforming the MSCI Emerging Markets Index return of -2.15%.
• The Fixed Income median return was +1.62% in the fourth quarter of 2018, and this is the only asset class to achieve positive performance. Fixed Income underperformed relative to the FTSE TMX Canada Bond Universe Index, which returned +1.77%.
• BNY Mellon Asset Allocation Trust Universes also provides insight regarding alternative asset classes. Private Equity reported a high median return of +7.25%, followed by Real Estate at +2.96%, and Hedge Funds at -0.04% for the last quarter.
BNY Mellon Canadian Master Trust Universe Median Plan Returns*