Update as at June 30, 2016 - Five-year annualized return of 9.2%, six-month return of 2.0%
Caisse de dépôt et placement du Québec presented today an update of its performance as at June 30, 2016. Over five years, the weighted average annual return on clients’ funds reached 9.2%, generating net investment results of $86.8 billion for this period. With respect to its benchmark portfolio, la Caisse produced $9.4 billion of value added. For the first six months of the year, the average return stood at 2.0%, generating $1.6 billion of value added. Net assets totalled $254.9 billion.
Caisse overall return vs. benchmark portfolio
“Over the past 12 months, the market environment has changed significantly and general uncertainty in the global economy has led to more volatility in stock and currency markets. Greater political instability in several parts of the world has added to the fundamental issues – economic rebalancing in China, lower corporate profits in the United States, insufficient reforms in Europe – and points to weak global growth for the years ahead,” said Michael Sabia, President and Chief Executive Officer.
“Faced with these uncertainties, our portfolio continues to be resilient and our goal remains the same: generate stable returns, less vulnerable to market highs or lows. We will maintain a prudent and disciplined approach and continue to seize the best investment opportunities throughout the world.”
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INVESTMENT HIGHLIGHTS
In the first six months of the year, CDPQ Infra, la Caisse’s new subsidiary, presented the Réseau électrique métropolitain (REM), a public transportation project valued at $5.5 billion, for which la Caisse committed to invest $3.0 billion. Spanning a 67-km route, the REM will be the third largest automated transportation system in the world and the first project to be carried out using the innovative model developed by la Caisse to develop and operate large infrastructure projects in Canada and globally.
Internationally, la Caisse invested in leading Australian and European companies, including the acquisition of a 44% interest in Greenstone, one of Australia’s insurance distributors, and a EUR 200-million investment in Eurofins, a world leader in food, environment and pharmaceutical products testing. In India, la Caisse announced that it will invest USD 150 million in renewable energy projects. It also opened offices in Mexico City and New Delhi, adding to those established these past two years in Europe, the United States, Singapore and Australia.
In Québec, la Caisse carried out a number of transactions in the technology and innovation sector and with high-growth companies in global markets. In particular, la Caisse invested in Moment Factory, AddÉnergie, Stingray, Felix & Paul Studios, Lumenpulse and Triotech. To foster growth through innovation and globalization, la Caisse also inaugurated Espace CDPQ, an investment and development hub, located at Place Ville Marie and intended for Québec’s entrepreneurs. At the same time, la Caisse announced the creation of a $50-million fund, $40 million of which will be allocated to Québec SMEs aiming to expand internationally, and $10 million dedicated to companies in the seed stage.
In real estate, Ivanhoé Cambridge carried out $3.4 billion of acquisitions, including several in a few key markets in the United States, in line with its investment strategy. With its partner Callahan Capital Properties, it completed the acquisitions of the landmark building 1211 Avenue of the Americas and 330 Hudson Street in New York City. Ivanhoé Cambridge continued to increase its presence in the multiresidential sector by making more than USD 160 million of acquisitions with other partners, particularly in San Francisco and in New York. In Québec, Ivanhoé Cambridge partnered with Claridge to invest $100 million in real estate projects in the Greater Montréal region.
PERFORMANCE HIGHLIGHTS
As at June 30, 2016, clients’ net assets totalled $254.9 billion, up $6.8 billion from $248.0 billion at December 31, 2015. This growth is attributable to net investment results of $4.8 billion, in addition to net deposits of $2.0 billion.
Returns by asset class and differences in relation to the benchmark index
Over five years, la Caisse’s annualized return was 9.2%, outperforming its benchmark portfolio, which stood at 8.3%. This difference generated $9.4 billion in value added.
Over this period, Fixed Income benefited from lower yields and credit spreads, returning 5.4%. Real Asset portfolios, namely Real Estate and Infrastructure, generated a solid return of 11.5%, mainly attributable to the strong operating results of portfolio assets. The Equity asset class, whose strategy focuses particularly on well-established companies, exposed to global growth and generating more stable, predictable returns over the long term, generated a 10.4% return. The Private Equity portfolio posted a higher return of 11.4%. Of the $9.4 billion of value added generated over five years, $8.2 billion came from the Public Equity and Private Equity portfolios.
For the half year ended June 30, 2016, la Caisse generated a 2.0% return, compared to 1.3% for its benchmark portfolio, which represents $1.6 billion of value added.
Over six months, Fixed Income benefited from the further decline in yields, generating an appreciable return of 3.8% and net investment results of $3.1 billion. In Real Assets, the Real Estate and Infrastructure portfolios delivered a 2.5% return and net investment results of $1.0 billion. Equity generated a 1.4% return and net investment results of $1.7 billion. These results reflect a stronger Canadian market, but also the weaker performance of global markets compared to previous years. La Caisse’s Equity portfolio has nevertheless been resilient, generating a return above that of its benchmark index, which posted -1.0%.
RISK MANAGEMENT AND FINANCIAL STABILITY
La Caisse’s available liquidity remains robust and ensures potential commitments can be met and that contingencies are covered.
In addition, la Caisse’s exposure to market, credit, counterparty and liquidity risks remained substantially unchanged since December 31, 2015.
OPERATING EXPENSES
Annualized operating expenses stood at 20.8 cents per $100 of average net assets, a level which compares favourably with that of its industry.
ABOUT CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC
Caisse de dépôt et placement du Québec (la Caisse) is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at June 30, 2016, it held $254.9 billion in net assets. As one of Canada's leading institutional fund managers, la Caisse invests globally in major financial markets, private equity, infrastructure and real estate. For more information, visit cdpq.com, follow us on Twitter @LaCDPQ or consult our Facebook or LinkedIn pages.
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