Caisse portfolio returns 13% in 2013
Quebec pension plan posts strong annual results
The Caisse de depot et placement du Quebec had another strong year in 2013, led by growth in the value of its U.S. equities that helped generate a 13.1 per cent annual return on investments.
Quebec's largest pension fund manager said it beat its benchmark portfolio, which grew by 12.6 per cent, and the value of its assets rose to $200.1 billion from $176 billion in 2012.
Net investment results totalled $22.8 billion and net deposits were $1.2 billion as of Dec. 31, 2013.
The Caisse said stronger equity markets in the United States were the largest engine for growth last year, rising by 22.9 per cent. The $18.2 billion gain included $3.4 billion from its private equity portfolio.
Inflation-sensitive investments such as real estate and infrastructure grew by 12.5 per cent or $3.4 billion.
Fixed income investments generated a zero return because of a rise in interest rates.
At year-end, the Caisse's assets included $93.8 billion in equities, $69.2 billion in fixed income, and $31.8 billion in inflation-sensitive investments.
The Caisse's eight largest clients, which each had different return targets and risk tolerance, had returns ranging between 8.9 and 15.5 per cent.
Over four years, the weighted average return was 10 per cent as assets increased by $68.5 billion.
"With a 10 per cent annualized return over four years, we have exceeded our clients' long-term targets," said Caisse CEO Michael Sabia, who insisted the fund manager's strategy is working.
"In an economic environment characterized by major adjustments in emerging markets, a lengthy recession in Europe and the beginnings of a recovery in the United States, we have stayed focused on our strategy and continued to invest in quality assets anchored in the real economy."
The Caisse invested $3.6 billion in Quebec companies last year and $10.3 billion over four years. Quebec assets grew by $20.3 billion over four years to $53.8 billion, with $32.5 billion invested in the private sector.
In addition to increasing investments in Quebec, the Caisse said it is focused on supporting the development of entrepreneurship in the province that will drive future growth.
"In 2013, we were especially active with small and medium-sized businesses and we enhanced what we can offer to the manufacturing and mining sectors, two key drivers of the economy."
Early last year, the Caisse created the Global Quality Equity portfolio focused on large, established companies exposed to global growth that aims to generate more stable returns. The portfolio's assets reached $17.2 billion.
Its real estate subsidiary, Ivanhoe Cambridge, spent $5.2 billion on acquisitions last year by strengthening its presence in large U.S. cities, repositioning its European portfolio and increasing its investments in Montreal and Quebec City.