Quebec pension fund manager Caisse earns over 9% return in 2017

Quebec’s Caisse de depot pension fund manager says it earned a 9.3 per cent return in 2017, ending a three-year streak of decreasing returns.

The performance marginally surpassed its reference index and compared to a growth of 7.6 per cent in 2016.

Caisse CEO Michael Sabia said the institutional investor achieved its five-year goal of delivering a solid return that exceeds its comparator group and the long-term needs of its clients.

“The essence of our strategy is to deliver reliable results year after year with the goal of achieving good long-term performance. That’s what occurred in 2017,” he said in a news release.

Total assets as of Dec. 31 were $298.5 billion, up $24.6 billion in one year, while net deposits totalled $3.2 billion.

Its eight main clients received returns between eight and 10.9 per cent last year.

Returns were $110 billion over five years for a 10.2 per cent annualized return over the period.

Net assets increased by $122 billion since 2012, including $12.6 billion from its clients.

Annual returns last increased between 2012 and 2013, when they rose 3.5 percentage points to 13.1 per cent.

In 2014 the fund manager posted a return of 12 per cent, marking the beginning of a three-year streak of decreasing returns. It finished 2015 with a return of 9.1 per cent, and 7.56 per cent in 2016.

Equities did the heavy lifting in 2017, rising 13.6 per cent to $149.5 billion, while fixed income was up 3.5 per cent to $96.7 billion. Real estate increased 8.7 per cent to $50.4 billion.

Real estate was the only portfolio that failed to exceed its reference index.

The Caisse said the strong growth in equities doesn’t fully capture the surge in multiples for tech companies and those with accelerating growth.

Sabia said investors are facing an “unusual environment” as markets grapple with reasonably solid economic fundamentals, synchronized global growth and investor concerns over how efforts to curb inflation will impact interest rates.

He said the Caisse is building a more resilient portfolio to withstand market volatility, but that geopolitical risks and tensions related to social inequality persist.

The Caisse said it has diversified its geographic exposure over the last five years by expanding global presence by $105 billion to reach $190 billion invested globally to date.

It also more than doubled its exposure in growth markets since 2012 to more than $35 billion.

Canada’s second-largest pension fund manager made $6.7 billion in new investments with the province’s private sector, which it said is the main driver of the economy and jobs.

It is now partners with more than 750 companies based in the province.


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