Quebec’s giant pension fund manager, Caisse de dépôt et placement du Québec, posted a 7.6 per cent return on investment last year, bringing its net assets to $270.7 billion.
The annual result was better than the 5.8 per cent return for its benchmark portfolio, but it was the weakest result since 2011 — and less than the 9.1 per cent earned in 2015.
The result places the Caisse above average among Canadian pension funds. Earlier this month, the Royal Bank of Canada reported Canadian defined benefit pension plans closed out 2016 with an annual return of 6.8 per cent.
The Caisse’s growth last year was led by equity investments, which account for nearly half of the Caisse’s portfolio.
A strong performance by the Canadian stock market and investments in companies with high U.S. exposure such as Alimentation Couche-Tard, Gildan and Magna generated a 22.7 per cent return.
Real estate and infrastructure investments also performed well, earned a 10.6 per cent return.
Fixed income, which comprises a third of the Caisse’s portfolio, lagged with a 2.9 per cent return as low interest rates depressed returns for bonds, real estate debt and short-term investments.
Protectionist talk, but no action
At a news conference in Montreal on Friday, Caisse president and CEO Michael Sabia called the performance “solid” amid uncertain geopolitical times.
He noted that while there has been talk within U.S. political circles about adopting more protectionist trade policies. the American investment market remains strong.
“We’re in a period where a lot of things are being said on economic issues, but there’s not been a lot done,” Sabia said.
But Sabia also said it’s important for the Caisse to invest in Quebec’s private sector.
“It’s our way,” he said.
The Caisse’s investment strategy, he added, is guided by two goals: encouraging growth of small and medium companies and helping Quebec companies establish themselves in global markets.