The Caisse de dépôt et placement du Québec posted a 10.4 per cent return for 2019, well surpassing its 2018 annual return of 4.2 per cent.
The jump represents $31.1 billion in gains for the fund, putting its net assets at $340.1 billion.
“The portfolio delivered the returns we were expecting in a context where the market really took off in 2019 and, from our point of view, may even seem disconnected from the real economy,” said Charles Émond, president and chief executive officer of the Caisse, in a press briefing on Thursday.
Equities outperformed in a big way, posting 15.3 per cent returns between both public and private assets. Meanwhile, fixed income came in at a robust 8.9 per cent, while real assets lagged, with just one per cent in returns.
For fixed income, the Caisse emphasized in its report that it has upped its exposure to a more diversified basket of sub-asset classes, including corporate credit, real estate debt, specialty finance and sovereign credit.
As for real assets, real estate proved the laggard of the portfolio for the year, posting a negative 2.7 per cent. During the press briefing, Nathalie Palladitcheff, president and chief executive officer of Ivanhoé Cambridge, noted the Caisse’s real estate arm has historically owned significant shopping centre assets that have suffered lately as consumer habits have shifted to favour online shopping.
“We were down 2.7 per cent, in spite of satisfying figures over five years,” she said. “You can see . . . 7.2 per cent and for 10 years we had a return of 9.2 per cent, which are horizons that are much more compatible with the type of industry we’re in, because in real estate you need to be long term. But we’re not satisfied with the returns we achieved in 2019.”
The active transition away from these struggling properties is ongoing, said Palladitcheff. Notably, the Caisse spent $11 billion on real estate acquisitions during 2019, including industrial spaces in Asia Pacific and Brazil, residential space in London and office space in Toronto. In particular, industrials performed well for the portfolio last year, while offices also pushed returns higher, especially for European properties.
Meanwhile, infrastructure performed better than other real assets, at 7.1 per cent, but returns fell rather short of its index benchmark of 17.7 per cent. Public equities posted very healthy double-digit returns at 17.2 per cent, slightly underperforming its benchmark, while private equity returned 10.5 per cent.