Caisse beats its benchmark

Returns helped by private equity and real estate.

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quebec flagThe Caisse de dépôt et placement du Québec announced yesterday that it earned a 9.6% return on assets in 2012. The return beat the plan’s benchmark portfolio target of 9.3%.

The strong returns helped grow net assets under management at the Caisse to $176.2 billion at the end of 2012, up from $159 billion at the end of 2011.

“Our 2012 results contribute to the work we have done since we restructured our portfolios in the summer of 2009 to generate solid long-term results. Since the restructuring, we have generated a 10.7% annualized return despite an uncertain and volatile economic climate,” said Michael Sabia, president and CEO. “Again this year, we increased our investments in Quebec and focused on this market to generate returns by helping Quebec companies grow, at home and abroad.

“These results reflect the efforts we’ve made in recent years, but one thing is certain: we still have more work to do. In a changing world economy that has begun to gradually recover, we will continue to pursue our new strategic plans, which aim for even greater long-term stability,” he added.

Much of the Caisse’s positive growth came from its real estate, private equity and foreign equity portfolios, which delivered returns ranging from 12.4% to 15.8%. Its fixed income portfolio returned 3.9%, a total, Sabia said, he was happy with while also realizing the returns won’t be sustainable in a rising interest rate environment. The plan’s Canadian portfolio returned 6.6%, lagging more than a point behind the index.

“In 2012, global growth ran out of steam, and we had a slowdown in emerging markets, a sustained recession in Europe and a timid recovery in the United States,” said Roland Lescure, executive vice-president and chief investment officer with the Caisse. “In this context, Canada and Quebec also slowed. Even so, progress was made: the private sector recovered in the United States and an upturn began in China and certain emerging markets. These positive signs, combined with strong action by European policy-makers to shore up the euro, enabled the equity markets to finish the year on a stronger footing.”

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