La Caisse, formerly known as Caisse de dépôt et placement du Québec, reported a 4.6% return for the first half of the year, topping its benchmark’s 4.3% gain, and raising its asset value to C$496 billion ($357.5 billion). The Canadian pension fund also reported five- and 10-year returns of 7.7% and 7.0% respectively, beating its benchmark’s returns of 6.6% and 6.4% respectively over the same periods.
La Caisse’s equity portfolio was the top performing asset class during the first half with a 6.0% return, outperforming its benchmark’s 5.5% gain. The pension fund attributed the robust return to Canadian and emerging market stocks, as well as opportunistic risk-taking during the markets slide in early April.
“Tariff issues related to U.S. policy were a key concern in the first half of the year. Financial markets experienced significant volatility, with a stock market correction in April, followed by a significant rebound,” La Caisse President and CEO Charles Emond said in a statement. “Despite this strong performance, we must remain vigilant since the impact of the U.S. administration’s measures has not yet been fully observed.”
Infrastructure assets registered the next-highest gain, rising 4.5% for the first six months of the year. However, the results fell well short of its benchmark’s performance of 8.1% over the same period. Despite the shortfall, La Caisse reported a five-year annualized return of 11.2% for the asset class, which easily outperformed the 9.0% return for its benchmark.
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“The portfolio once again benefits from the healthy diversification of assets and its favorable positioning in promising sectors, including renewable and transitional energies, ports, highways, and telecommunications,” the pension fund stated.
The pension fund’s fixed-income assets surpassed its benchmark’s 3.0% return with a 3.9% gain during the first half, which the La Caisse attributed to high yields due to a high-rate environment and credit premiums. However, over the past five years, its fixed-income investments returned only 0.2%, which the fund’s reporting attributed to the ongoing effects of the significant market correction in 2022. Performance was still ahead of its benchmark’s 0.8% loss.
Private placement assets beat La Caisse’s benchmark with a 3.4% gain versus 2.0%, which La Caisse said was a result of rising profitability among its portfolio companies, although the growth is decelerating in a slowing environment.
“During the first half of the year, the teams continued their disposition strategy and realized just over $8 billion in realizations, while making new investments of $4 billion,” the pension fund said.
The private placement portfolio’s five-year annualized return was 16.7%, ahead of its benchmark index’s 15.4% return. “Exposure to the technology, financial, and industrial sectors was particularly beneficial over the period,” La Caisse said.
The pension fund’s real estate portfolio remained flat during the first two quarters, edging up 0.1%, well short of its benchmark’s 1.2% gain. La Caisse said that although it saw good returns from investments in shopping centers and offices, this was weighed down by high interest rates. The fund attributed the significant lag behind its benchmark to the portfolio’s concentration in the U.S. office sector, which “experienced difficulties over the period.” The five-year annualized returns, however, were closer to its benchmark, increasing 0.3% versus the benchmark’s 0.4%.
La Caisse also noted that its overall portfolio’s exposure to foreign currencies had a negative impact on the fund’s first-half performance, which it said was mainly due to the sharp depreciation of the U.S. dollar.
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Tags: Asset Allocation, Caisse de dépôt et placement du Québec (CDPQ), pension fund performance
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