The Caisse de dépôt et placement du Québec ended 2018 with a return of 4.2 per cent, beating its benchmark portfolio, which returned 2.4 per cent, and bringing the portfolio to a net asset total of $309.5 billion.
“In 2018, our investment strategy was put to the test. For the first time in several years, global stock markets finished the year in negative territory due to the beginning of monetary policy normalization, rising tariffs and geopolitical uncertainty,” said Michael Sabia, president and chief executive officer of the Caisse, in a press release.
“We achieved our objective of building a robust and resilient portfolio that performs well in these kinds of markets. The significant value added created this year and over five years shows that what we put into place has been effective, benefiting all Quebecers.”
Public equity posted a 3.5 per cent return, while fixed income contributed a 2.1 per cent return. During an uncertain outlook for bonds in 2018, the Caisse was relatively shielded by its increased exposure to alternative forms of debt in its fixed income portfolio, including corporate and sovereign credit, as well as real estate debt and specialty finance.
“We need to be prepared for volatile markets reacting to uncertainty arising from a slowing global economy, which we’re already seeing in China and, increasingly, in the U.S., as well as the impact of geopolitical risks on consumer confidence, business investment and consequently on the real economy,” said Sabia. ”In this environment, we’ll continue to execute our strategy to deliver solid long-term results.”
Real assets were a standout performer, yielding a nine per cent return, netting $4.8 billion. Within the asset class, the Caisse highlighted infrastructure allocations, including an expansion of its stake in private North American renewable energy company Invenergy, and a 40 per cent stake in CLP Power India Private Ltd., specifying it intends to help the company pivot to renewable energy production.
As for real estate, the Caisse continued to invest in the logistics sub-sector, including its co-acquisition of Pure Industrial Real Estate Trust with the Blackstone Group.
“Our investment in Quebec’s private sector continued to expand, reaching $44.3 billion in 2018,” said Sabia. ”During the year, we helped Quebec companies grow and expand internationally. Our investment approach also focused on the new economy, with nearly 40 per cent of our transactions conducted in those sectors.”