Solid even when the markets dip

This is the big question I was asking myself before D-Day: will the Caisse de dépôt’s portfolio have been able to resist the bear market of 2022? Will he have done relatively well under the circumstances?


Why this question ? Because the talent of a fund manager is not only verified when the markets go up, but also when they go down. Since the famous debacle of 2008, when the Caisse had lost 25%, all the leaders of the Caisse had sworn that the portfolio had become more resilient, able to face the worst waves.

What about finally? The answer is definitely positive. Our collective woolen sock lost its feathers during this extraordinary year 2022 when interest rates exploded, but it did significantly better than the stock and bond markets, and much better than its benchmark index.

For ordinary mortals, its negative return of 5.6%, or -24.6 billion, is anything but a good performance. But placed in the context where the stock market deflated by 8.7% in Canada and 18.1% in the United States, combined with a 16% drop in the US bond market, the Caisse’s performance becomes reassuring.

Even better: the managers have achieved the 3e performance of the Caisse’s history if we compare it to its benchmark index, the one that tracks the same type of assets held by the Caisse, and which fell -8.3% in 2022.

In short, this favorable difference of 2.7 percentage points between the Caisse’s return (-5.6%) and that of its index (-8.3%) translates into added value of $10.4 billion. for depositors. Only the years 2010 and 2021 had done better.

Precisely, in 2021, the Caisse had obtained a return of 13.5% in a bull market, a difference of 2.8 points with its benchmark index, which was the 2e performance of its history.

“We are able to beat comparables in both bull and bear markets,” Caisse CEO Charles Emond told reporters in the conference room.

Often, small savers are advised to put 60% of their portfolio in the stock market and 40% in the bond market, through balanced mutual funds or others. However, if the Fund had followed this breakdown in 2022, it would not have lost 5.6%, but 11.3%.

In short, the wallet has passed the test, so far.

What explains this good relative performance? Essentially, the Caisse’s strong presence in the real estate, infrastructure and private equity markets. You will tell me that for these sectors, it is difficult to make a valid comparison with peers, to find solid benchmarks, unlike the stock market. Either.

Except that over five years, these distinct investment choices made by the Caisse in infrastructure and private placements maintain better returns than the benchmark. As for real estate, the gap has been favorable for two years, after the Caisse cleaned up its portfolio.

Another success of the Caisse: its investment decisions for the bond market, which caused it to lose 1.5 percentage points less than the benchmark, or 14.9% against 16.4%.

Lastly, its stock market return (-11.3%) was similar to that of the benchmark, but this performance was achieved when the Caisse had exited oil, one of the only sectors to have resisted the collapse of 2022.


Speaking of oil, many detractors have criticized the Caisse for its withdrawal from the oil sector and its firm commitment to the green economy. It’s all well and good, the greenery, we heard, but not at the cost of seeing our pension funds amputated.

However, in response to this question from me, Charles Emond said that for five years, the Caisse has achieved a compound annual return of 20% with renewable energies, while the oil sector would have given 7%.

Readers will find me too soft on the Fund, but it’s hard to miss: in January, the institution was named “Fund of the Year 2022” by Global SWF, an organization that studies the activities of around 400 funds in the world.

Reason for this recognition: “for its impact on the development of Quebec, for its leadership with sovereign and public investors on a global scale, for its significant investment activity in 2022 and, more broadly, for its contribution to the industry advancement,” reads the SWF website.

Another distinction: the Caisse ranked 1er ranked out of 59 pension funds in 2022 for its contribution to sustainable finance.

I have been an ardent critic of the Caisse de depot for 20 years, and I remain so. The institution is making missteps, as seen with Celsius, Azure Power Global and Otera Capital, and the media must pick up on them. I dare to believe that these media criticisms, in fact, contribute to making our Caisse better.

The fact remains that the retirement funds of teachers, nurses, construction workers, certain municipal officials and all workers (via the Quebec Pension Plan) are in good hands, after all. Should we refrain from saying it?

The bet of Business Press

Every year, journalists from Business Press try to predict the result of the Caisse de dépôt the day before its publication. The winner this year? Martin Vallières, who had predicted a negative return of 5.5%, or 0.1 point less than the performance of the Fund (-5.6%). Honorable mentions to Jean-Philippe Décarie (-5.9%) and Nathaëlle Morissette (-5%). Yours truly was among the pessimists (-8.8%) and the 17 people who took part in the game had an average of -3.6%.


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