Caisse de Depot et Placement du Quebec, Canada’s second-largest pension-fund manager by assets, returned 13 percent last year as publicly traded stocks in the U.S. and elsewhere pushed assets under management above C$200 billion ($180.1 billion) for the first time.
Net investment income climbed to C$22.8 billion in 2013 from C$14.9 billion a year earlier, the Montreal-based fund manager said today in a statement. Net assets rose to C$200.1 billion as of Dec. 31 from C$176.2 billion at the end of 2012.
While the results trailed the 14 percent average increase of Canadian pension funds as estimated in a January report by RBC Investor Services, they beat the fund’s own benchmark of 12.6 percent last year. Over four years, the Caisse said its weighted average annual return was 10 percent -- topping the 8.8 percent return of its benchmark.
Equities were the best performing asset class for the Caisse last year, returning 23 percent on average. U.S. publicly traded stocks advanced 41 percent, compared with 16 percent for Canadian stocks and 20 percent for private equity, the Caisse said. Its C$17.2 billion “Global Quality Equity” portfolio -- which includes large-capitalization stocks that the Caisse considers to be world leaders -- climbed 32 percent.
Inflation-sensitive investments returned 13 percent, driven by a 15 percent gain for the C$22.6 billion real-estate holdings. The return for the Caisse’s C$69.2 billion fixed-income assets was nil.
The Caisse oversees pensions for retirees in the French-speaking province of Quebec, with a dual mandate to maximize returns and foster economic growth in the province. With net assets of C$201.5 billion as of Dec. 31, Canada Pension Plan Investment Board is the country’s largest manager of public pension funds.
Ivanhoe Cambridge, the Caisse’s real-estate unit, is selling most of its C$1.8 billion collection of hotels, CEO Daniel Fournier said. Ivanhoe Cambridge has sold about 45 percent of its hotel assets in the past three years, and a pending transaction that could be completed in the next few weeks will take that proportion to 67 percent, Fournier said. He declined to identify the hotels or the buyer.
Proceeds from the sale of hotels will be reinvested in the purchase of office buildings, residential properties and shopping centers, Fournier said.
After acquiring a minority stake in the Port of Brisbane last year, the Caisse wants to add to its C$8 billion portfolio of infrastructure assets in the next few years, Sabia said. Infrastructure -- a category that also includes airports and gas-distribution networks -- returned 11 percent for the Caisse in 2013.
Sabia was careful not to criticize a plan by the Quebec government to keep head-office jobs in the province. Quebec Finance Minister Nicolas Marceau said Feb. 20 he would propose amendments to the province’s Business Corporations Act that would give public companies based in the province “adequate means of defense” against unsolicited bids.
Recommendations contained in a government-commissioned report on head offices are “like a toolbox,” Sabia said. “It’s are full of ideas, but you need to be selective. There’s always the risk that you could go too far. Some elements from the report have the potential to be part of a good solution.”
Sabia also said the Caisse remains committed to Rona Inc. (RON), the Quebec home-improvement retailer that replaced its CEO last year. The company reported fourth-quarter profit last week that missed analysts’ estimates. With an equity stake of about 15 percent, the Caisse is Rona’s biggest investor.
Rona’s new management team is “doing what’s necessary to re-establish the strength of this company,” Sabia said. “The Caisse is a long-term investor, and we are there to accompany their turnaround. We are convinced of Rona’s potential.”
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