CDPQ’s Annual Report Reveals a Smooth Operator in Turbulent Markets

From climate change initiatives to net returns, the investor maintains its cool through ‘key transactions in major asset classes.’

Caisse de dépôt du Québec (CDPQ) maintained its resilience in the late 2018 market dip and stood on track of its internal targets across the board, according to its 2018 annual report.

Its strategies in real assets produced the most profound returns for the $309.5 billion institutional investor, generating a cool 9.0%, significantly higher than its fixed income and equities portfolios, which generated 2.1% and 3.5% in the period, respectively.

CDPQ’s overall return totaled 4.2%, higher than the benchmark and representing $5.3 billion in added value compared to the previous period. Respective five- and 10-year performance figures chalked up to 8.4% and 9.2%, a reflection of the distraught period markets went through at the end of 2018.

It’s a clear shift that exposes the effect of derogatory markets on their strategies, whereas equities was the highest performer in CDPQ’s portfolio at the halfway mark of the year.

“We generate sustained returns through key transactions in major asset classes,” CDPQ said in the report. One of the most significant of these is its $1 billion investment in the Réseau express métropolitain rapid transit system in its home province, as well as more than $5.8 billion in infrastructure investments, $9 billion in private equity, and $16.6 billion in real estate.

The California Public Employees’ Retirement System (CalPERS) also witnessed real assets rise to the top of its return profile, generating more than 20% in its latest report, significantly higher than any other asset class in the $350+ billion portfolio.

With regards to its climate change initiatives, CDPQ outperformed its target with the addition of $10 billion in low-carbon assets in 2018, prompting it to raise the target in 2020. It also managed to reduce the carbon output of investments in its portfolio by 10%, with 25% scheduled for 2025.

The general theme that can be construed from the report is long, continuous growth for one of the country’s largest institutional investors. Since 2009, its net assets grew from $120.1 billion in the beginning of 2009 to $309.5 billion in 2018. The progress is illustrated below:

Soource: Caisse de dépôt du Québec

Related Stories:

CDPQ Assets Hit $308.3 Billion in First Half of 2018

CDPQ Raises Low Carbon Asset Target to C$32 Billion in 2020


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