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Canada’s CDPQ Returns 13.5% in 2021

Canada’s second-largest pension fund’s asset value has grown by C$149.1 billion over the past five years.
By Michael Katz



Canada’s second-largest pension fund, the Caisse de dépôt et placement du Québec (CDPQ), reported a 13.5% return for the fiscal year ended Dec.  31, compared with 10.7% for its benchmark portfolio, to raise its asset value to C$419.8 billion ($327.7 billion).

The investment gain represents C$10.4 billion in added value over the past year, and the fund’s asset value has grown by C$149.1 billion and C$241.0 billion over the past five and 10 years, respectively. The pension fund also reported five- and 10-year annualized returns of 8.9 % and 9.6 %, respectively, which also beat its benchmark portfolio over the same time periods.

Private equity investments helped boost the pension fund, returning 39.2%, compared with a 32.1% return for its benchmark, while the fund’s infrastructure returned 14.5%, which was its best performance in a decade, beating its benchmark portfolio’s 11.4% return.

“Infrastructure and private equity posted exceptional performances,” CDPQ President and Chief Executive Officer Charles Emond said in a statement. “Our strategies are working and take into account today’s major challenges: the climate transition, the digitization of the economy, and the continuous changes on an international scale.”

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However, Emond also said the pension fund is “facing factors that will substantially complicate the business environment in 2022, such as the imbalances caused by the pandemic, the rise in interest rates and the surge in inflation.”

The fund’s stock markets portfolio generated a 16.2% return, just ahead of its benchmark’s return of 16.1%. The fund said that its exposure to developed countries helped buoy the portfolio’s returns, which were somewhat offset by the weaker performance of the major Asian stock markets.

Real estate investments provided a return of 12.4%, which was more than double its benchmark’s return of 6.1%. The fund attributed the strong outperformance to strategic changes initiated just before the COVID-19 pandemic hit, such as increasing investments in sectors such as logistics, residential real estate, and life sciences, while decreasing the portfolio’s exposure to shopping centers and traditional offices.

Related Stories:

CDPQ Unveils Climate Strategy to Reach ‘Net Zero’ by 2050

CDPQ Invests in M3 Mortgage Group

CDPQ Takes Greater Stake in Energy Firm Énergir with $1.14 Billion Transaction

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Home > News > Risk > Another Inflation Jump Resumes Stocks’ Tumbling Ways
Risk

Another Inflation Jump Resumes Stocks’ Tumbling Ways

The CPI vaults 7.9% for February, so the S&P 500 returns to retreating.
By Larry Light

The description of inflation as transitory is even more of a laughingstock now. A hotter-than-expected inflation report landed with an unwelcome thud this morning: The Consumer Price Index jumped 7.9% year over year in February, a fresh 40-year high.

Stocks greeted these ill tidings by returning to their falling pattern. After a nice pop up Wednesday of2.6%, equities were down on the news, with the S&P 500 descending 1% and the Nasdaq Composite slipping 1.5% at the outset of Thursday trading.

Accelerations in food (up 7.9%) and energy (rising 25.6%) prices led the inflationary climb. Oil in particular, although it has dipped some this week, has been spiraling upward in 2022 as the stock market dropped. Then there’s the war in Ukraine to consider. The war-prompted shrinkage of Russia’s oil and natural gas plus both nations’ wheat in the world markets is increasingly felt in overall price hikes.

In the view of Bill Adams, chief economist for Comerica Bank, “Inflation will accelerate in March and April as the knock-on effects of the Russia-Ukraine war push prices even higher at supermarkets, gas pumps, and on utility bills.”

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Before the war, which started February 24, Russia was the globe’s second-biggest oil and natural gas producer, and Russia and Ukraine together exported a quarter of the world’s internationally traded wheat, he writes in a research note. “Disruptions to supplies of those commodities will cause a big hit to U.S. consumer spending power at a time when inflation was already historically high,” Adams warns.

The mood on Wall Street is sour due to inflation’s rampage. “It’s quite possible that year-over-year inflation breaches the psychological benchmark of 10% by mid-summer, causing a breakdown in confidence and hinderance to growth, particularly in more price-sensitive developing markets,” predicts Peter Essele, head of portfolio management at Commonwealth Financial Network.  

If a silver lining exists in the CPI report, used car prices’ 0.2% slipping is it. This category had been skyrocketing. The used car decrease “could signal the beginning of the much-anticipated deceleration in goods prices,” says Charlie Ripley, senior investment strategist for Allianz Investment Management.

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