MONTRÉAL, Aug. 15, 2014 /CNW/ - La Caisse de dépôt et placement du Québec provided an update today on its performance as at June 30, 2014. At the end of this period, the four-year average annual return was 11.1%, generating net investment results of $71.5 billion. For the first six months of the year, the weighted average return on clients' funds stood at 6.7%. Net assets totalled $214.7 billion.
Caisse overall return vs. benchmark portfolio
A chart is available on La Caisse's website
"In the first half of the year, the global economy performed as we generally expected, and the U.S. economy proved robust," said Michael Sabia, President and Chief Executive Officer of La Caisse. "Overall, world markets improved, due in part to lower interest rates. Canadian equity regained momentum and made up for some of the sluggishness of recent years by outperforming the other markets.
"Our 6.7% return reflects market performance during the past six months and contributes to our long-term performance. And this is what counts. Our annualized return of 11.1% over four years is slightly above that of its benchmark portfolio and exceeds our clients' needs.
"The investment environment will become increasingly demanding. The challenges ahead include modest and fragile global economic growth, high geopolitical risks, the level of interest rates and, more generally, the normalization of monetary policies," added Mr. Sabia.
HIGHLIGHTS OF CAISSE ACHIEVEMENTS
In the first six months of the year, La Caisse continued to pursue its strategy to foster the growth of Québec SMEs in all sectors. It notably invested in Ocean Group, a major player in the marine industry, Lumenpulse, a technology company, and BFL Canada, active in the insurance sector. Furthermore, La Caisse committed $80 million to Novacap, a fund that combines both expertise and financing, and $25 million to Anges Québec, dedicated to the growth of innovative companies. In February, La Caisse also launched Innover. Agir., a forum for entrepreneurs that identifies and takes concrete steps to strengthen entrepreneurship in all regions of Québec.
La Caisse invested in large businesses, notably as part of financing activities by the Laurentian Bank, TC Transcontinental and Industrial Alliance. La Caisse, among other initiatives, invested in WSP Group, the Port-Daniel-Gascons cement plant, and Stornoway Diamond, for an amount totalling more than $300 million. Its real estate subsidiary, Ivanhoé Cambridge, committed close to $50 million for the redevelopment of the Place Ste-Foy shopping centre in Québec City.
Over the period, La Caisse's new commitments and investments reached $835 million, maximizing its impact on a greater number of companies in all regions of Québec. That brings its new investments and commitments in Québec companies to almost $11 billion over four years.
In terms of infrastructure, La Caisse acquired a 25% stake in London Array, the world's largest offshore windfarm, located off the coast of the United Kingdom. La Caisse also acquired a 24.7% share in Invenergy Wind, a North American leader in the wind power industry. In keeping with its active management strategy in equity markets, La Caisse's Global Quality Equity portfolio, which uses an absolute-return strategy, reached $25 billion in assets under management as at June 30, 2014.
Internationally, Ivanhoé Cambridge undertook a strategic repositioning of its portfolio and enhanced its presence in certain key markets. It invested more than $250 million in the U.S., notably through the acquisition of a stake in 330 Hudson in Manhattan. It was also a partner in the acquisition of residential buildings in London, representing an investment of more than $200 million, and committed more than $120 million in Brazil for the development of a new shopping centre and the expansion of existing ones.
Over four years, La Caisse's average annual return was 11.1% compared to that of its benchmark portfolio at 10.9%. This performance reflects net investment results of $71.5 billion. Of this amount, more than half came from the Equity portfolios, which generated $42.0 billion, $10.2 billion of which was in Private Equity. Fixed Income and Inflation-Sensitive Investments generated $13.2 billion and $12.4 billion, respectively, in net investment results.
During the four-year period, Fixed Income generated an annualized return of 5.6%, or 1.0% above its index. For their part, the Equity asset class portfolios returned 13.7%, which is in line with the benchmark index. Finally, Inflation-Sensitive Investments, which notably includes the Real Estate and Infrastructure portfolios, recorded a 13.3% return, below that of its index. This difference is primarily due to the Infrastructure portfolio, which is compared to a liquid index comprised of publicly-traded securities whose values reflect bullish markets of recent years.
For the six-month period, La Caisse recorded a 6.7% return, which is consistent with its benchmark portfolio. During this period, the Equity asset class returned 8.8%, generating net investment results of $8.1 billion, $1.9 billion of which came from the Private Equity portfolio. With a 4.7% return, the Fixed Income portfolios generated $3.4 billion in net investment results.
Inflation-Sensitive Investments generated a 3.5% return and net investment results of $1.1 billion. In this asset class, $2.5 billion of new infrastructure acquisitions has been recorded since December 2013. The return on the Infrastructure portfolio has been impacted given that the performance of these new assets is not yet fully reflected as at June 30, 2014.
Returns by asset class and differences in relation to the benchmark index
A chart is available on La Caisse's website
As at June 30, 2014, clients' net assets totalled $214.7 billion, up $14.6 billion from $200.1 billion at December 31, 2013. This growth is attributable to net investment results of $13.3 billion, in addition to net deposits of $1.3 billion.
As at June 30, 2014, the Equity asset class represented 48% of the overall portfolio. Fixed Income and Inflation-Sensitive Investments represented 36% and 16% of the portfolio, respectively.
RISK MANAGEMENT AND FINANCIAL STABILITY
La Caisse's available liquidity remains robust and ensures potential commitments can be met. At the beginning of the second half of the year, in July 2014, and as part of its day-to-day activities, La Caisse issued US$2.0 billion in debt securities on the U.S. market. This offering targeted the renewal of existing financing set to mature in November 2014.
In addition, market, credit, counterparty and liquidity risks all remained substantially unchanged from their levels as at December 31, 2013.
Operating expenses and external management fees are in line with forecasts and are at the same level as in 2013, at less than 17 cents per $100 of assets under management.
ABOUT LA CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC
La Caisse de dépôt et placement du Québec is a long-term institutional investor that manages funds primarily for public and parapublic pension and insurance plans. As at June 30, 2014, it held $214.7 billion in net assets. As one of Canada's leading institutional fund managers, La Caisse invests in major financial markets, private equity, infrastructure and real estate, globally. For more information: www.lacaisse.com.
SOURCE: Caisse de dépôt et placement du Québec
For further information: Maxime Chagnon, Senior Director, Media Relations, Tel.: 514-847-5493, [email protected]