For the first half of 2024, the Caisse de dépôt et placement du Québec is posting an average return of 4.2% — below its benchmark index of 4.6%. Its performance is being weighed down in particular by its real estate portfolio, which continues to record a negative return. In the coming months, the Caisse de dépôt will have to redouble its “discipline” to deal with “volatility” in the markets, its CEO, Charles Émond, also stressed on Wednesday.
The return is not as juicy as hoped, but the Caisse’s assets have climbed since the beginning of the year. During the first half of the year, its net assets increased by $18 billion to $452 billion, according to the institution’s most recent financial results dated June 30.
“These are results that deliver what was expected in the context, that meet the objectives of our depositors,” argued Charles Émond, in a press conference with the media. The context of the last few months has been marked by several phenomena, he noted: “a historic concentration” of stock market gains in the hands of a handful of American public companies, the postponement of rate cuts in the United States and modest global economic growth.
Beyond “this snapshot of the first half of the year,” Charles Émond was pleased with the institution’s performance in recent years. Over five years, its average annualized return stands at 6.0%, above the benchmark index of 5.3%. Over ten years, its return represents a “historic record” for the Caisse, said Mr. Émond. It stands at 7.1%, beating the benchmark index of 6.3%.
Real estate weighs on results
Among the Caisse de dépôt’s various asset portfolios, the stock market portfolio performed best during the first six months of the year, recording a return of 13.6%, slightly above the benchmark index at 13.2%.
Unsurprisingly, it is the real estate portfolio that is lagging behind. Its return for the first half represents a loss of 3.6%, compared to a benchmark index of -0.9%.
Mr. Émond attributed this performance to the “difficult” period that this “industry in full transformation” is going through while office work habits have not yet returned to normal. “Real estate has a future! We spend the vast majority of our time under a roof. The spaces must be redesigned but the need is there,” defended the senior executive.
“We made a major sectoral pivot of what we hold in the portfolio. We are in the process of integrating our real estate subsidiary Ivanhoé Cambridge, which will bring us a host of benefits. Right now, we are focusing on our business model since we are moving from operator-investor to exclusively investor,” explained Mr. Émond.
“Discipline” in the face of “volatility”
The start of the second quarter has already been marked by “its share of twists and turns,” Mr. Émond also noted, mentioning in particular the fall in the stock markets at the beginning of August. The Caisse de dépôt will have to demonstrate “discipline” to deal with this “stock market volatility.”
“Our mandate is not to follow the S&P 500. It is to provide a return that is diversified to our depositors, that is stable, that is volatile than the markets,” stressed the CEO of the Caisse.