High Canada dollar eats into pension fund results

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ProfitHuntersClub Site Admin Joined: 31 Mar 2006 Posts: 25	Posted: Sun Nov 04, 2007 1:14 pm    Post subject: High Canada dollar eats into pension fund results Reuters October 19, 2007 TORONTO (Reuters) - The Canadian dollar's ascent to a 31-year high "wreaked havoc" on third quarter pension fund results, according to a survey released on Friday. Quiz: Are you in tune with the loon? RBC Dexia Investor Services, which provides custody and administration services to institutions, said the median loss for Canadian pensions was 0.7 percent in the quarter to September 30. In the same 2006 quarter, the median gain was 4.7 percent. That trims year-to-date gains to just 1.8 percent, said the firm, which maintains a C$340 billion universe of Canadian pension plans and money managers. Year-to-date, the MSCI World index of global equities is up 8.0 per cent in local currency terms, but down 4.1 percent in Canadian dollar terms. "Given that foreign stocks constitute about half the equity allocation of a typical pension fund, Canadian plan sponsors are sharpening their focus on currency management," Don McDougall, director advisory services at RBC Dexia, said in a statement. In an interview, McDougall said managers of larger pension portfolios -- those with C$1 billion in assets or more -- have hedged some of their currency exposure for some time. But "the dilemma becomes now more important or relevant to smaller pension plans." The Canadian dollar reached parity with the U.S. greenback on September 20 and has climbed since. It was at US$1.0371 on Friday afternoon, or 96.41 Canadian cents to one U.S. dollar, close to a 33-year high. Most pension funds were "underexposed" to the Canadian materials and technology sectors, which rallied in September, RBC Dexia said. "Historically, the fourth quarter has actually been quite strong and needless to say, we're going to need that again this year or it's going to be one of the softer years we've had in some time," McDougall said. ($1=$0.96 Canadian) (c) Reuters 2007 Source: http://finance.sympatico.msn.ca/investing/insight/article.aspx?cp-documentid=5602924
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