Canada’s CDPQ Returns 13.5% in 2021 | Chief Investment Officer

Canada’s second-largest pension fund, the Caisse de dépôt et placement du Québec (CDPQ), reported a 13.5% return for the fiscal year ended Dec. 31, compared with 10.7% for its benchmark portfolio, to raise its asset value to C$419.8 billion ($327.7 billion).

The investment gain represents C$10.4 billion in added value over the past year, and the fund’s asset value has grown by C$149.1 billion and C$241.0 billion over the past five and 10 years, respectively. The pension fund also reported five- and 10-year annualized returns of 8.9 % and 9.6 %, respectively, which also beat its benchmark portfolio over the same time periods.

Private equity investments helped boost the pension fund, returning 39.2%, compared with a 32.1% return for its benchmark, while the fund’s infrastructure returned 14.5%, which was its best performance in a decade, beating its benchmark portfolio’s 11.4% return.

“Infrastructure and private equity posted exceptional performances,” CDPQ President and Chief Executive Officer Charles Emond said in a statement. “Our strategies are working and take into account today’s major challenges: the climate transition, the digitization of the economy, and the continuous changes on an international scale.”

However, Emond also said the pension fund is “facing factors that will substantially complicate the business environment in 2022, such as the imbalances caused by the pandemic, the rise in interest rates and the surge in inflation.”

The fund’s stock markets portfolio generated a 16.2% return, just ahead of its benchmark’s return of 16.1%. The fund said that its exposure to developed countries helped buoy the portfolio’s returns, which were somewhat offset by the weaker performance of the major Asian stock markets.

Real estate investments provided a return of 12.4%, which was more than double its benchmark’s return of 6.1%. The fund attributed the strong outperformance to strategic changes initiated just before the COVID-19 pandemic hit, such as increasing investments in sectors such as logistics, residential real estate, and life sciences, while decreasing the portfolio’s exposure to shopping centers and traditional offices.