CANADA - Caisse de dépôt et placement du Québec will focus on generating returns in line with its liabilities and simplify the schemes investments as it tries to recover from the financial crisis, its chief executive said.
In a letter on Caisse' website, CEO Michael Sabia outlined a handful of changes the staff will implement over the next 18 months.
Among them will be investing in a way that protects members from interest rate and inflation risks, while generating return.
Sabia wrote: "Our investment strategies and objectives will be built on the principle of acting ‘in the spirit of a fiduciary' - in other words, always trying to generate risk-adjusted returns that are well aligned with the liabilities of our depositors."
He said Caisse has already moved to double its liquidity, reduce the debt on its balance sheet by C$20bn (US$18.8bn), and has bought some C$9bn of equities to take advantage of the rising markets.
Caisse came under heavy fire from legislators and local media for losses in 2008 and part of 2009.
Sabia became chief executive in March and took over an organisation that had just posted record losses in 2008 of C$39.8bn related to risky investments in commercial asset backed securities. Meanwhile, in 2009, the pension fund manager continued to bleed assets from its real estate investments which lost C$5.7bn in the first half of 2009.
Sabia responded by restructuring its real estate division to focus more on its core competency and shedding investments in mezzanine and other subordinated loans. (Global Pensions; August 12, 2009)
Sabia is promoting a change in culture within the investment organisation that requires all portfolio managers to balance risk and return in all investment decisions.
In his letter, Sabia said Caisse's investments going forward will be based on "plain old common sense" with a renewed focus on risk management.
He said: "Going forward, we aim to invest only in financial instruments that we understand and that we have mastered."
Other goals over the past 18 months will include increased collaboration with scheme members and more investments in Quebec's local economy.
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Royal Bank of Scotland (RBS) faces a £102m impact on liabilities as a result of equalising guaranteed minimum pensions (GMPs), according to its annual results.
Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point