Alternative assets outperformed traditional assets for the quarter

TORONTO–The median return of the BNY Mellon Canadian Master Trust Universe, a BNY Mellon Global Risk Solutions fund-level tracking service, was +1.66% for the third quarter of 2019 despite slowing global growth indicators. The 1 year median return as of September 30, 2019 was +7.63%, while the median 10-year annualized return was +8.38%.

The BNY Mellon Canadian Master Trust Universe results are based on $246.8 billion worth of investment assets in Canadian investment plans, with the average plan size of $2.9 billion. The Universe is designed to provide peer comparisons by plan type and size, and it comprises 85 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.

“Equity markets around the globe reflected a continued slowdown in the economy, reporting only modest performance as compared to the last two quarters’ higher returns. Amid evidence of slower global growth, alternative asset classes posted positive results for the quarter and outperformed most traditional assets, with private equity leading the way,” said Catherine Thrasher, Strategic Client Solutions and Global Risk Solutions, CIBC Mellon and BNY Mellon.

Private equity investments delivered the strongest performance for the quarter, in contrast to the second quarter of 2019 where traditional asset classes outperformed alternatives. Private equity investments delivered a quarterly median return of +3.13%, up from +0.76% for the second quarter. The one year median return for the private equity class was +11.42%.

Among traditional asset classes, U.S. Equity performance was up from last quarter, with a quarterly median return of +2.26% and a one-year return of +4.83%. Canadian Equity performance was lower this quarter but still positive, as was Canadian Fixed Income performance. International and Non-Canadian Equity median returns also experienced lackluster performance but were still positive, at +0.35% and +1.17% respectively.

Q3 2019 Highlights of the BNY Mellon Canadian Master Trust Universe

Median returns of the BNY Mellon Canadian Master Trust Universe outperformed Canadian plans over $1 billion by 12 basis points for Q3 2019.

Canadian Foundations and Endowments trailed among plans for the third quarter of 2019, posting median performance of +1.32%.

Canadian Universities were further ahead, with a return of +1.41%.
The Fixed Income median return was +1.69% in the third quarter of 2019. Fixed Income outperformed relative to the FTSE Canada Bond Universe Index, which returned +1.19%.

The majority of the equity segment returns were lower this quarter as compared to the second quarter of 2019, however still displaying positive results across the board. U.S Equity posted the highest quarterly median return, at +2.26%, but still ended well behind the S&P 500 Index return of +3.04%. Canadian Equity median performance of +1.73% was also behind the S&P/TSX Composite Index result of +2.48%. International Equity and Non-Canadian Equity performance was lower, with respective median corresponding returns of +0.35% and +1.17%. These results finished ahead of the MSCI EAFE Index return of +0.31% and behind the MSCI World Index return of +1.99%.

Further insight from the BNY Mellon Asset Allocation Trust Universes indicates that Emerging Markets Equity posted a negative median return for the quarter of -2.12%, outperforming the MSCI Emerging Markets Index return of -2.84%.

BNY Mellon Asset Allocation Trust Universes also provide insights regarding alternative asset classes. Private Equity reported a positive median return of +3.13%, followed by Real Estate at +2.08%. Hedge Funds also reported a positive median return of +1.56% for the third quarter.

Universe Medians

3Q
2019

One-
Year

Three-
Years

Five-
Years

Ten-
Years

Canadian Master Trust Total Fund

1.66

7.63

7.02

7.44

8.38

Canadian Equity

1.73

4.18

7.04

5.63

7.71

U.S. Equity

2.26

4.83

12.89

13.83

15.57

International Equity

0.35

2.42

7.53

8.04

8.51

Non-Canadian Equity

1.17

3.68

9.84

10.74

11.73

Fixed Income

1.69

11.34

3.51

5.39

5.91

Real Estate

2.08

7.56

8.26

8.02

—–

Canadian Foundations & Endowments

1.32

4.79

6.90

6.71

8.52

Canadian Universities

1.41

5.40

6.92

7.11

8.36

Information containing any historical information, data or analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Past performance does not guarantee future results. The Information should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. None of the Information constitutes an offer to sell (or a solicitation of an offer to buy), any security, financial product or other investment vehicle or any trading strategy. Some products or services are available only through BNY Mellon.

About CIBC Mellon
CIBC Mellon is dedicated to helping Canadian institutional investors and international institutional investors into Canada service their financial assets throughout the investment lifecycle. Founded in 1996, CIBC Mellon is 50-50 jointly owned by The Bank of New York Mellon (BNY Mellon) and Canadian Imperial Bank of Commerce (CIBC). CIBC Mellon delivers informed investment services for investment funds, pension plans, insurance companies, banks, foundations, endowments, corporations, and global financial institutions whose clients invest in Canada.

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