Northern Trust Pension Universe Data

Canadian Pension Plans Buoyed by Positive Momentum in Equity Markets During Fourth Quarter 2020 - Seite 2

• Canadian Equities, as measured by the S&P/TSX Composite Index, advanced 9.0% for the quarter and 5.6% for the year. Health Care and Consumer Discretionary sectors led performance for the quarter and the Information Technology sector was the top performer for the year.

• U.S. equities posted solid gains with the S&P 500 Index generating 7.0% in CAD for the quarter and 16.3% in CAD for the year. All sectors finished the quarter in positive territory, with Information Technology leading performance for the year. The NASDAQ witnessed its best year since 2009 (in USD), while the S&P 500 and Dow Jones concluded 2020 at record highs.

• International developed markets, as measured by the MSCI EAFE Index, generated 10.7% in CAD for the quarter and 6.4% in CAD for the year. All sectors posted positive returns for the quarter, with the exception of Health Care returning a modest decline. The Energy sector led performance for the quarter, while the Information Technology sector closed the year as the top performing sector.

• The MSCI Emerging Markets Index advanced 14.2% in CAD for the quarter and closed the year with a solid 16.6% return in CAD. All sectors produced positive gains for the quarter, with the Health Care and Information Technology Sectors leading returns for the year.

The Canadian economy witnessed modest momentum during the fourth quarter, benefiting from fiscal measures implemented to bring support to businesses as well as household incomes. The labour market observed an increase in jobs throughout October and November followed by a decline in December. Overall, the unemployment rate nudged lower to 8.6% in December from 9.0% in September. The Canadian dollar also advanced during the quarter in the face of USD weakness.

The U.S. economy benefitted from an overall improvement in employment numbers with the unemployment rate trending lower and finishing the quarter at 6.7%. The U.S. Federal Reserve (The Fed) maintained the federal funds target range at 0 – 0.25% and its commitment to using the tools necessary at its disposal to support the economy. The Fed also reiterated maintaining an accommodative stance until its targets for employment and inflation are achieved.

International markets welcomed further fiscal relief with the European Central Bank (ECB) ramping up its Pandemic Emergency Purchase Programme (PEPP) while extending it through the first quarter of 2022. The Bank of England (BoE) also increased its bond purchase program bringing further stimulus to the economy. Markets received a boost in the quarter as the European Union (EU) and the UK finally agreed to a post Brexit free trade agreement. In the Asia Pacific region, the Bank of Japan (BOJ) left interest rates and its Quantitative Easing program unchanged; however, it extended the time frame of the funding program for an additional six months.