Quebec’s pension manager rode a rising stock market to a 4.2% return in the first half of the year, essentially matching its benchmark.
(Bloomberg) — Quebec’s pension manager rode a rising stock market to a 4.2% return in the first half of the year, essentially matching its benchmark.
Caisse de Depot et Placement du Quebec said its public equities portfolio gained 10.6% in the six-month period, benefiting from the fund’s decision to boost exposure to technology companies.
Private equity returns of 1.4% were well below the benchmark of 7.2%, however, after years of outsized gains. The portfolio was “constrained” by higher financing costs, the C$424 billion ($314 billion) fund said in a statement Wednesday.
“The many contradictory signals confronting investors — the direction of inflation, rates, employment and markets — make the environment challenging,” Chief Executive Officer Charles Emond said. “This invites us to remain vigilant and emphasizes the importance of diversification and adopting a long-term approach.”
Caisse manages the pensions of retirees in Quebec, Canada’s second-most populous province, as well as various provincial insurance plans. Over 10 years, its annualized return was 7.9%, compared with 7% for a benchmark portfolio.
Real assets, which include infrastructure and real estate, rose 4.7%, beating the index, mainly on the strength of renewable energy, telecommunications and transportation assets, Caisse said. The value of its property holdings dipped 1.5%.
The fund has been an active buyer and seller of real estate in recent years as it tries to reduce its reliance on office buildings and shopping malls and expand in other areas, such as warehouses and industrial property.
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In June, Emond said a reckoning is coming for lower-quality office buildings over the next few years, made worse by tightening credit at US regional banks.
On Tuesday, the Ontario Teachers’ Pension Plan said it is making a bigger bet on bonds and credit and is adding leverage to fund it. The pension manager earned a 1.9% return in the first half as its fixed income and credit portfolio advanced and stocks rebounded.
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