CDPQ Assets Hit $308.3 Billion in First Half of 2018

Equities are among the highest performers for the Canadian pension fund’s mid-year returns.

Canada’s Caisse de dépôt et placement du Québec (CDPQ) is now worth C$308.3 billion (US $236.7 billion), returning 3.3% in the first half of 2018.

The pension plan for Canada’s public and para-public pension and insurance plans’ fixed income class returned 1.1%. Real assets, meaning infrastructure, and real estate produced 5%, and the equities portfolio returned 4% for the first half of the year. 

So far, CDPQ’s gains are up C$9.8 billion from December 2017. 

The fund attributed the mid-year’s fixed income returns to bonds and the current yield. One of its key deals in the period ended June 30 was a $300 million co-investment with Fonds de solidarite’s FTQ, an investment firm, in renewable energy company Boralex. The joint venture was funded via an unsecured subordinated loan. CDPQ has invested $170 million under the deal so far.

CDPQ increased its renewable energy assets, boosting its stake in Invenergy Renewables and Azure Power Global. The pension plan’s infrastructure subsidiary, CDPQ Infra, also finished the planning phase of the Réseau express métropolitain’s development in the spring. Construction on this railway, which will serve the Montreal area, will soon commence. La Caisse has invested $2.95 billion in that project so far.

The fund’s real estate subsidiary, Ivanhoé Cambridge, added to its industrial and logistics investments due to e-commerce’s growing popularity.  It also announced plans to redevelop two of its shopping malls, the Eaton Centre and Laurier Québec.

As for most institutional investors, a low point was the stock market’s first quarter selloff, but that didn’t stunt the pension fund’s growth by much, as global equity reaped one of its best six-month returns to date, and the highest in five years at 13%. Growth markets, however, suffered due to the selloff and trade tensions brewing with the US.

“The market environment became more complex in the first half of the year. Tightening liquidity conditions and protectionist measures by the US have increased volatility since January,” said Michael Sabia, CDPQ’s president and chief executive officer, who added that there is a “change of tone in the market” with the Federal Reserve’s tightening of monetary policy and a potential trade war.

Although the mega-fund’s mid-year results seem sluggish, just under its 3.5% benchmark, CDPQ has averaged a 9.9% annual return over the past five years. The five-year returns also beat its 9% benchmark for that period.

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