The Caisse de dépôt et placement du Québec posted a 3.3 per cent average return for the first half of 2018, adding $9.8 billion since the end of 2017 and bringing its net assets to $308.3 billion as of June 30, 2018.

“The market environment became more complex in the first half of the year,” said Michael Sabia, president and chief executive officer of the Caisse, in a press release. “Tightening liquidity conditions and protectionist measures by the U.S. have increased volatility since January.”

In the first half of 2018, the Caisse sought to diversify its investments with more allocations to credit and less-liquid assets, including renewable energies and eco-friendly technology, noted the report. It also highlighted its infrastructure allocations in these areas, including increasing its stake in Invenergy Renewables to 52.4 per cent in May.

Read: Caisse ups stake in global renewable energy company

Notably, the Caisse’s 3.3 per cent return fell short of the 3.5 per cent return of its benchmark portfolio. Broken down by asset class, fixed income yielded a 1.1 per cent or $1 billion return. Real assets posted a five per cent return, producing a net result of $2.6 billion, which the report attributes largely to good performance in the Caisse’s real estate and infrastructure holdings. Equity market returns were comparatively lower, posting a four per cent return, yielding $5.6 billion, with private equity responsible for much of the growth. The report also noted that the growth markets segment of its equity portfolio encountered difficulties spurred by rate increased in the U.S. market and trade tensions..

“The long-running global bull market is slowing down,” said Sabia. “As the U.S. Federal Reserve continues to normalize its monetary policy and rates gradually climb, we are seeing a change of tone in the markets. The active support the markets have become used to since the financial crisis has ended, and they now face real geopolitical challenges – primarily escalating trade tensions.

“We remain vigilant in these hypersensitive markets that are in transition, and we will continue to focus on resilient assets.” 

Read: Caisse returns 9.3% in 2017 amid transition period for global investors

 

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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Chas:

Volatility has nothing to do with liquidity. What liquidity is he referring to anyway? The Caisse’s infrastructure investments? Whose valuations influence returns, not volatility? Or Bomabardier’s, whose liquidity certainly wasn’t helped by his ham-fisted interference in that rail deal decision?

Friday, August 03 at 11:41 am | Reply

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