TORONTO - Canadian pension plans finally got a reprieve in the second quarter as soaring energy and material group stocks pushed investment returns into positive territory after three consecutive negative quarters, a survey released Friday shows.

The survey, by pension consultant RBC Dexia Investor Services, concluded that Canadian pension funds, despite a worldwide credit crunch, earned one per cent on their investments in the quarter ended June 30, trimming six-month losses to one per cent.

The company, which studied plans with combined assets of more than $340 billion, said energy-rich equity portfolios along with mining stocks such as companies digging up potash overcame global credit concerns in the period.

"Energy and the materials group were the two main groups to drive things," Don McDougall, director of advisory services for RBC Dexia, said in an interview.

"Part of that materials group is potash. Potash is fertilizer. That was the main driver in terms of what was positive," he said.

Prices for potash have soared in recent months following a surge in fertilizer orders from China and India, which are facing rising demands for more food from growing middle classes.

In fact, Canadian pension plans would have done even better if it were not for the drag from poorly performing financial sectors in Canada and abroad, said McDougall.

"It's the financials that were quite negative, less so in Canada certainly than they were in the U.S.," he said.

Since, "the financials, the energy and the materials groups make up roughly three quarters of the Canadian market," they have a big impact on pension plan returns, he said.

"Financials for the quarter were off negative 3.3 per cent," he said.

On the other hand, "they actually held up better in Canada than the financials did in other markets. But none the less negative."

During the quarter, the S&P TSX composite index rose 9.1 per cent, largely because of a 22.9 per cent increase in energy stocks, with fertilizer producer Potash Corp. (TSX:POT) accounting for most of the rest of the overall index gain, RBC Dexia said.

The oil and gas sector helped make the TSX one of the best performing stock markets in the world in the April-June period.

"Albeit modest, after posting three consecutive negative quarters, it's a welcome reprieve, especially considering the weakness in other global markets," said McDougall.

"Unfortunately, with advances so narrowly focused, Canadian pensions had a difficult time keeping pace and underperformed the composite benchmark of 0.9 per cent this quarter, and by three per cent over the year-to-date," he said.

Global stock assets suffered a 3.4 per cent drop in the quarter, making it the worst performing asset class, and underperforming the MSCI World Index by 0.6 per cent.

McDougall said that in terms of local currency, "the index has plunged 12.8 per cent since the beginning of the year, but pension plans have lost only nine per cent once exchange rates are taken into account."

Canadian pension plans, he said, also saw their fixed income holdings, or bonds, slide 0.3 per cent over the quarter.

While increasing speculation over inflation kept domestic bonds in the red throughout the period, they managed to outperform the DEX Universe Bond Index by 0.4 per cent.

"Fortunately for those holding real return bonds, they unsurprisingly flourished in this type of environment, gaining an impressive 10.7 per cent over six months," said McDougall.

RBC Dexia is based in London and was formed two years ago as a joint venture equally owned by Royal Bank of Canada (TSX:RY) and Dexia, a Belgian-French financial institution specialized in public finance.

The joint venture company provides services to institutional investors around the world, including global custody, fund and pension administration, securities lending, shareholder services and analysis. The company has US$2.4 trillion in client assets under administration and employs more than 4,300 employees in 15 countries, with major operations in Luxembourg and Canada.

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