Northern Trust Pension Universe Data: Canadian Pension Plan Returns Rise in Q2

Northern Trust (NASDAQ:NTRS) reported that Canadian pension plan returns in its Northern Trust Canada Universe rose in Q2, with the median plan up 6.6% for the quarter and 6.8% year-to-date.

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TORONTO--(BUSINESS WIRE)-- Canadian pension plan returns rose in the second quarter, supported by robust equity market performance, with the median pension plan returning 6.6% for the quarter and 6.8% year-to-date, according to the Northern Trust Canada Universe.

Geopolitical issues continued to dominate in the second quarter, with financial markets responding positively to a potential peace agreement in the Middle East that helped lower energy prices. Countries around the world also continued to navigate inflationary concerns and the lingering uncertainty surrounding trade policy and tariff friction. While the Bank of Japan and the European Central Bank raised interest rates to bring price stability to their respective economies, monetary policymakers in the U.S. and Canada maintained their respective policy rates as they remain focused on underlying data trends. Broad equity markets, with the exception of Canada, produced strong double-digit returns for the quarter led by emerging markets. Canadian equities also generated a positive return despite concerns of a slowing economy and a softer labor market early in the period. The Canadian bond market also finished the quarter in positive territory.

“Canadian pension plans delivered solid results during the second quarter as markets rebounded and investors looked through a challenging geopolitical backdrop,” said Katie Pries, Country Executive for Northern Trust Asset Servicing in Canada. “The quarter highlighted the resilience of diversified portfolios and the importance of maintaining a long-term perspective through periods of uncertainty.”

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

Equity markets experienced a strong rebound during the second quarter, fueled by the momentum in corporate fundamentals, relatively strong earnings and renewed enthusiasm for artificial intelligence (AI). Although macroeconomic uncertainty remained throughout the period, stocks demonstrated resilience with major equity indices surging higher and closing the quarter with solid returns. As oil prices continued to decline late in the period alleviating some inflationary pressures, bond yields declined as well, allowing the bond market to finish the period with a positive return.

• Canadian Equities, as measured by the S&P/TSX Composite Index, rose 7.0% in CAD for the quarter. Performance gains were led by the financials, health care, and industrial sectors, while the materials, communication services and energy sectors posted negative results.
  
  
• U.S. Equities, as measured by the S&P 500 Index, advanced 17.1% in CAD for the quarter. All sectors witnessed positive performance, with the exception of the energy sector. The information technology sector was the lead performer, while the energy sector experienced a double-digit decline as oil prices declined late in the period. Despite the second quarter decline, the energy sector remains up double digits year-to-date.
  
  
• International developed markets, as measured by the MSCI EAFE Index, returned 12.9% in CAD for the quarter. Similar to the S&P 500, the information technology sector was the leading outperformer, while the energy sector was the only segment of the index with a negative return.
  
  
• The MSCI Emerging Markets Index gained 26.2% in CAD for the quarter. The information technology sector led performance across the index, up a remarkable 76.2%, while the energy and consumer discretionary sectors produced the largest negative performances over the period.

The Canadian economy saw a sharp increase in the inflation rate in May driven largely by a surge in gasoline prices and higher energy costs. News flow surrounding a ceasefire with the U.S. and Iran late in the quarter brought energy prices down which resulted in inflation figures retreating in June, with headline inflation at 2.8%. Higher prices and geopolitical uncertainty were key factors weighing on demand. Job growth was off to a slow start early in the quarter but experienced healthy gains in May and June with the unemployment rate edging down to 6.5% from 6.7% in March. The Bank of Canada held the overnight rate steady at 2.25% throughout the quarter, noting dual risks to the economy. That is, that economic activity has been weak and U.S. trade policy uncertainty persists, but also that high energy costs remain a concern owing to the conflict in the Middle East.

The Canadian fixed income market, as measured by the FTSE Canada Universe Bond Index, returned 2.0% for the quarter. Provincial bonds outperformed both federal and corporate bonds while long-term bonds outpaced both mid-term short-term bonds over the period.

The U.S. economy has remained resilient despite the heightened levels of geopolitical tensions and macroeconomic uncertainty. Inflation dropped to 3.5% in June, the first decline in five months, as energy costs eased after the ceasefire between the U.S. and Iran. The unemployment rate fell to 4.2% in June down slightly from 4.3% in March. The Federal Reserve (Fed) held interest rates steady in the 3.5%-3.75% range during the quarter. The newly appointed Fed Chair, Kevin Warsh, emphasized the committee's commitment to price stability while expressing confidence that economic growth could continue without creating excessive inflation.

International markets have been plagued with inflationary pressures as energy prices soared following the war in the Middle East and fears over global energy supply. The European Central Bank raised its deposit facility rate to 2.25% in June, as surging energy costs led inflation to rise above 3%. The Bank of England (BoE) left rates unchanged at 3.75% throughout the quarter. Governor Andrew Bailey noted that while the fall in oil prices were encouraging, higher energy prices over the last four months pointed to “inflationary pressures in the pipeline.” Conversely, the Bank of Japan hiked its benchmark rate to a three-decade high of 1% in June as the country deals with a weaker Yen and higher energy prices pushing up the cost of living.

Emerging markets experienced its strongest quarter since 2009. Much of the support came from tech-heavy Taiwan and Korean markets benefitting from strong gains in memory and semi-conductor stocks. From a monetary policy standpoint, the People’s Bank of China held its one- and five-year loan prime rate (LPR) at 3.0% and 3.5%, respectively, for the 13th straight month reflecting a cautious stance amid geopolitical uncertainty, resilient industrial activity, soft consumer demand, and continued weakness in the property sector.

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking services to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2026, Northern Trust had assets under custody/administration of US$20.0 trillion, and assets under management of US$2.0 trillion. For more than 135 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on Instagram @northerntrustcompany or Northern Trust on LinkedIn.

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 https://www.northerntrust.com/terms-and-conditions.

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Media Contacts
Europe, Middle East, Africa & Asia-Pacific:
Camilla Greene
+44 (0) 20 7982 2176
Camilla_Greene@ntrs.com

Simon Ansell
+ 44 (0) 20 7982 1016
Simon_Ansell@ntrs.com

US & Canada:
John O’Connell
+1 312 444 2388
John_O'Connell@ntrs.com

Source: Northern Trust