CANADA - The C$122bn Caisse de dépôt et placement du Québec added $19.7bn in net assets in 2005 with a weighted average return of 14.7%.
Caisse comfortably beat its overall benchmark portfolio (12.9%) and Henri-Paul Rousseau, president and CEO said the year’s returns were 110 basis points above the first-quartile threshold and 270bp above the median return for Canadian fund managers, according to the benchmarking studies available.
“All depositors benefited from value added in 2005, in other words a return that surpassed the indexes specified in their individual investment policies,” he said.
The fund also undertook significant changes to its asset allocation, placing greater emphasis on high-potential assets like real estate, private equity, infrastructure, subordinated real estate debt and hedge funds.
“From 2002 to 2005, the proportion invested in these other investments increased from 24% to 28%, while depositors’ net assets were up $44.5bn,” Rousseau stated.
“These changes to the investment policy, the efforts made to enhance our operations and a strong performance by the markets have enabled the Caisse to generate a 14.0% average return over the past three years.”
However Rousseau warned such returns were not sustainable long term and said the financial markets would offer far lower returns in the years to come.
“For a portfolio such as the Caisse’s, we therefore expect a return of 7.0% over a 10-year horizon.”
As at December 31, 2005, depositors’ net assets totalled $122.2bn, up $19.7bn from 2004, with $15.2bn attributable to investment operations and $4.5bn to net deposits made by depositors during the same period.
That $15.2bn contribution was comprised of $4.5bn net investment income, $7.7bn net gains on the sale of investments, and $3.0bn unrealised net increases in the value of assets and liabilities on the balance sheet.
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