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RBC Investor Services (RBCIS) reported mixed performance for Canadian Defined Benefit pension plans under its administration in 2025: median returns were 0.6% for Q4 2025 and 7.9% for the full year. This followed a stronger year in 2024, where the median return was 1.6% for Q4 and 11.3% on an annual basis.
"Canadian pension plans navigated a year of stark contrasts in 2025, leveraging domestic equity strength amid global volatility," said Isabelle Tremblay, Director, Client Solutions, and Asset Owner Segment Lead, RBCIS. "While 2024's gains were fueled by U.S. equities and the Information Technology sector, 2025 saw a decisive shift toward Canadian Materials and Financials. This highlights the importance of strategic rebalancing in a fragmenting global market, a lesson reinforced by last year's U.S.-centric rally and this year's currency-driven opportunities."
Canadian equities in client plans returned 6.1% in Q4 2025 (versus 3.2% in Q4 2024) and 31.1% for the full year (versus 21.2% in 2024), closely tracking the TSX Composite Index, which gained 6.3% for the quarter and 31.7% annually. The TSX experienced its best year since 2009, driven by the Materials sector, which surged 100.6% annually (versus 21.4% in 2024), and Financials, up 35.3% (versus 30.1% in 2024). These sectors dominated the index's 2025 gains, contrasting with 2024's more evenly distributed growth.
Global equities diverged sharply from 2024's pattern, with client plans returning 1.4% in Q4 (versus 4.1% in Q4 2024) and 16.7% for the year (compared to 24.1% in 2024). The MSCI World Index returned 1.6% in Q4 (versus 6.3% in Q4 2024) and 15.4% for the year (versus 29.4% in 2024), weighed down by U.S. equities, which underperformed relative to other developed markets. The S&P 500 Index lagged with a 1.1% return in Q4 and 12.4% annually. Meanwhile, the MSCI Emerging Markets Index delivered 27.3% annually, outpacing the MSCI World Index for the first time since 2020. This reversal reflects attractive valuations and resilient growth in Asia.
"Geopolitical tensions and U.S. Federal Reserve uncertainty boosted safe-haven demand, while emerging markets demonstrated remarkable resilience, further shaping the strategic choices of pension plans," Tremblay added.
Currency dynamics significantly influenced asset class performance in 2025. The Canadian dollar strengthened by 4.7% against the U.S. dollar, a stark contrast to its depreciation in 2024, dampening returns on unhedged U.S. equity positions. Conversely, the loonie's weakness against the euro amplified gains from unhedged European exposures, echoing the currency-driven volatility seen in the prior year.
Fixed income for RBCIS client plans returned -0.6% in Q4 and 1.4% for the year, underperforming the FTSE Canada Universe Bond Index (-0.3% Q4, 2.6% annual). This gap stemmed from client portfolios' heavier allocation to long-term bonds, which declined 1.4% in Q4 and 0.7% annually, reversing 2024's gains of 1.3%. Shorter-term bonds outperformed in Q4 (0.3%), while mid-term bonds were the best-performing segment for the year (4.0%).
About RBC
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About RBC Investor Services
RBC Investor Services delivers investment servicing solutions to Canadian asset managers and asset owners, insurance providers, investment counsellors and global financial institutions. With more than 1,700 employees and offices across the globe, our focus is on safeguarding the assets of our clients and enabling their growth. Part of Royal Bank of Canada, Canada's largest bank and one of the top 15 banks globally, RBC Investor Services has over CAD 2.7 trillion of assets under administration. Learn more at rbcis.com.
Media Contact:
Ylana Kurtz, RBC Investor Services
SOURCE RBC Investor Services
