The headquarters of the Caisse de dépôt in Montreal. (Courtesy of the Caisse de dpt et placement du Qubec)

Canada's largest pension fund manager rejected criticism Wednesday that it's lagging behind the rest of the country because it missed out on the strong stock-market rebound.

The Caisse de dépôt et placement du Québec had 34 per cent of its assets in the market at the end of September, compared with 22 per cent at the end of 2008, a spokesman for the Quebec-based manager said.

Maxime Chagnon declined to divulge the Caisse's yield up until Sept. 30 but denied a report in the La Presse newspaper that said it is expected to pull in a five or six per cent return on investment for all of 2009 while other Canadian pension funds are on target for an average of 10 to 12 per cent.

"We have rebuilt our position on the stock markets," Chagnon said of the pension fund manager's approach since the arrival of CEO Michael Sabia in mid-March.

Chagnon said the Caisse transferred $8.5 billion of its fixed-income investments, primarily bonds, into shares between the end of March and the end of September.

In August, the Caisse announced it would revamp its real estate arm and abandon riskier commercial loans after $5.7 billion in losses wiped out other gains during the first half of 2009.

The pension fund manager said $4 billion of the losses were in real estate, including $1.7 billion in other less liquid, riskier, investments.

As of June 30, it also lost $1.3 billion from private equity and $400 million in asset-backed commercial paper.

Chagnon also brushed off La Presse's argument that Sabia's tighter risk management style is to blame for the losses.