Northern Trust Pension Universe Data: Canadian Plan Sponsors Post Negative Returns in the Final Quarter of 2018

TORONTO–(BUSINESS WIRE)–lt;a href=”https://twitter.com/hashtag/Assets?src=hash” target=”_blank”gt;#Assetslt;/agt;–Investment returns for Canadian defined benefit plans witnessed a
decline in the fourth quarter and closed out the year in negative
territory, according to data from the Northern Trust Canada Universe.

“Equity markets wrapped up 2018 on a sour note amid slowing global
growth, inflation fears, rising interest rates, U.S.-China trade war
concerns, an unsettled Brexit and struggles in emerging markets,” said
Arti Sharma, President and CEO of Northern Trust Canada. “Volatility
once again resurfaced in the wake of these stresses and allowed
uncertainty to dominate markets in the fourth quarter, resulting in the
median Canadian plan recording a return of -3.5 percent, versus the
previous quarter of -0.1 percent. Despite positive returns generated in
the first half of 2018, the median Canadian plan concluded the year with
a return of -1.0 percent, compared to 9.5 percent for 2017.”

The Northern Trust Canada Universe tracks the performance of Canadian
institutional investment plans that subscribe to performance measurement
services as part of Northern Trust’s asset servicing offerings.

Canadian equities as measured by the S&P TSX Composite Index posted a
return of -10.1 percent in the fourth quarter, a significant decline
from the previous quarter, and recorded a return of -8.9 percent for the
year. The downward move in commodity prices, in particular the
continuous decline in the price of oil, coupled with the expectation of
a more moderate growth environment going forward fueled much of the
weakness in the final quarter. The health care and energy sectors
witnessed the brunt of the losses during the quarter. Information
technology was the strongest performing sector for 2018, notwithstanding
weakness in the fourth quarter.

U.S. equity markets were rocked by volatility in the fourth quarter,
with the S&P 500 Index recording a return of -8.6 percent in CAD.
However, the U.S. index achieved a positive return for the year, as
risks arising from the U.S. Federal Reserve’s rhetoric, trade
uncertainty and the mid-term elections did not overwhelm gains made in a
positive start to the year, fueled by a tax-cut. The S&P 500 Index
returned 4.2 percent in CAD for the year.

The MSCI EAFE Index, which measures the performance of international
developed markets, returned -7.5 percent in CAD in the fourth quarter
and -5.6 percent in CAD for the year. Europe faced challenges amidst the
political backdrop, with the Brexit saga continuing in the UK and
anti-government protests in France. During the quarter, positive returns
were earmarked by high dividend paying sectors, namely utilities and
real estate.

Emerging markets continue to be challenged by a strong U.S. dollar,
rising Fed rates and unrelenting trade war tensions. The MSCI Emerging
Markets index returned -2.2 percent in CAD for the quarter and -6.5
percent in CAD for the year.

Despite a backdrop of rising interest rates, the Canadian fixed income
market as measured by the FTSE Canada Universe achieved a 1.8 percent
return in the fourth quarter and 1.4 percent for the year. Federal bonds
led performance over provincials and corporates for both the quarter and
the year. In similar fashion, mid-term issuers outperformed for the
quarter while both short and mid-term issuers outperformed their long
term counterparts for the year.

Northern Trust – Canada

A global leader in institutional financial services, our exclusive focus
in Canada is on providing asset servicing and asset management solutions
to institutional asset owners, investment managers, foundations and
endowments. We combine regional insights with a global breadth of
capabilities to support your needs.

Northern Trust Canada has been successfully servicing clients for over
30 years – including pension funds, investment managers, insurance
companies, government agencies and corporations. Our rich heritage and
intricate understanding of the region allows us to provide unique
insights and strategic perspectives to our clients. Visit northerntrust.com/canada
to learn more.

Northern Trust Canada Office: 145 King Street West, Suite 1910, Toronto,
Ontario, Canada M5H 1J8.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of
wealth management, asset servicing, asset management and banking to
corporations, institutions, affluent families and individuals. Founded
in Chicago in 1889, Northern Trust has a global presence with offices in
20 U.S. states and Washington, D.C., and across 23 locations in Canada,
Europe, the Middle East and the Asia-Pacific region. As of December 31,
2018, Northern Trust had assets under custody/administration of US$10.1
trillion, and assets under management of US$1.1 trillion. For more than
125 years, Northern Trust has earned distinction as an industry leader
for exceptional service, financial expertise, integrity and innovation.
Visit northerntrust.com
or follow us on Twitter @NorthernTrust.

Northern Trust Corporation, Head Office: 50 South La Salle Street,
Chicago, Illinois 60603 U.S.A., incorporated with limited liability in
the U.S. Global legal and regulatory information can be found at http://www.northerntrust.com/disclosures.

Contacts

Media Contact:
John O’Connell
+1 312 444 2388
John_O’Connell@ntrs.com
http://www.northerntrust.com/canada

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