Caisse de dépôt et placement du Québec posted a 13.1-per-cent return in 2013, boosted by rebounding equity markets and a new investment strategy focused on large businesses exposed to global growth.
The giant pension fund manager’s net assets at the end of 2013 totalled $200.1-billion, up from $176.2-billion a year earlier, and the first-time assets under management pass the $200-billion mark.
The increase was the result of $22.8-billion in net investment returns as well as $1.2-billion in net deposits.
The 13.1-per-cent return is below the 13.8-per-cent median return of Canadian pension funds for 2013 as calculated by RBC Investor and Treasury Services.
But it handily beat the 6.5-per-cent return of the Ontario Municipal Employees Retirement Systems (OMERS).
The Caisse’s return was above it’s internal benchmark of 12.6 per cent.
Over a four-year period, the weighted average annual return was 10 per cent, besting the internal benchmark return of 8.8 per cent.
Under chief executive officer Michael Sabia, the strategy has been to shift away from volatile investments to more stable, longer-term assets in such areas as private equity, real estate and infrastructure.
The Caisse is also investing more in large-cap stocks with a global profile, such as consumer products giant Colgate-Palmolive Co.
“Call me simple-minded but I like Colgate. They make toothpaste and people use toothpaste all over the world,” Mr. Sabia said at a news conference Wednesday.
“As far as we’re concerned, this plan works very well,” he said.
“Roller-coaster rides are not our thing,” he said.
“We’re exactly where we want to be.
“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,” he added.
Equity markets brought in a weighted return of 22.4 per cent in 2013, offset by bond markets’ minus 1.2-per-cent return, the Caisse said.
Publicly traded U.S. equities returned 41.3 per cent, compared with 16.3 per cent for Canadian stocks and 19.7 per cent in private equity.
The Global Quality Equity portfolio, created early last year, had assets of $17.2-billion at Dec. 31, 2013 and posted a return of 32.4 per cent last year. The portfolio is concentrated on securities of large, established companies exposed to global growth, to be held for the long term.
The Caisse also pushed ahead with a strong bias toward Quebec-based companies.
Publicly listed Quebec companies represent 32 per cent of the fund’s total investment in Canadian companies listed on the Toronto Stock Exchange, Mr. Sabia said.
“These investments are working very well,” he said.
The approach is to not only invest in Quebec companies, but help them thrive, he said. The Caisse stuck with hardware giant Rona Inc. through its difficulties and the company is making progress turning itself around, he said.
Last year, the Caisse invested $3.6-billion in Quebec companies. Over the past four years, assets in Quebec rose by $20.3-billion, reaching $53.8-billion at the end of 2013.
Looking ahead, Mr. Sabia cautioned that the transition from stimulative monetary policies around the world to “monetary policy normalization will take us into uncharted territory and inevitably create uncertainty.”Report Typo/Error