Caisse de dépôt et placement du Québec | Return of 4.2% over six months

The Caisse de dépôt et placement du Québec achieved a return of 4.2% over the six months ending June 30. With net assets now reaching $452 billion, Quebecers’ nest eggs performed less well than their benchmark index, at 4.6%.

For comparison, the Ontario Teachers’ Pension Plan (Teachers) announced exactly the same performance on Tuesday.

The Fund, however, largely outperformed the 1.5% performance of Canadian pension plans linked to companies listed on the S&P/TSX, calculated by Aon.

At a press conference, CEO Charles Emond spoke of a “historic concentration” of stock market gains in the largest companies listed on the American stock exchange.

“These are results that deliver what was expected in the context,” he assures. “I want to see the rest of the year continue in this vein.”

Fixed incomes cloud the picture

Fixed income securities, however, hurt the Caisse’s results, with a negative return of 1.7%, equal to its benchmark index in this sector.

The executives explain this loss of 2.4 billion by the rise in long-term government bond rates in Canada and the United States, while the market was expecting significant reductions in key rates which did not materialize.

The Caisse was more successful with its portfolio of stocks traded on the stock markets, achieving a return of 13.6%, slightly above its benchmark index. The financial institution is pleased to have achieved this with a more diversified portfolio than the rest of the market, which is increasingly banking on a few large American companies investing in artificial intelligence.

Over five years, however, the Caisse has performed less well than the benchmark index in public markets: 9.8%, compared to a benchmark index of 10.5%. “The difference is explained by the underweighting in technology stocks at the beginning of the period,” says Vincent Delisle, Senior Vice-President and Head of Liquid Markets.

Real estate

In a context of rising interest rates, the Caisse is struggling more in real estate. Its high exposure to the office sector in the United States contributed to a negative return of 3.6%, well below its benchmark index of -0.9%.

Charles Emond assures that the “turn” that the Caisse initiated in 2020 in this asset category has already helped reduce the gap between the performance of Quebecers’ nest eggs and its benchmark index. “We have initiated a pivot, by buying more logistics and residential,” he says. These sectors are less affected by the slowdown in commercial real estate.