The Caisse de dépôt et placement ahead of its Canadian peers

The Caisse de dôt et placement ahead of its Canadian peers


A reader, André S., told me a good one!  

To paraphrase Charles Emond, the CEO of the Caisse de depot et placement du Quebec, this is the story of a guy who, after a hard night at the casino, says to his wife: “Honey, I won $1100 last night only losing $3360 instead of $4460 if I had played according to my referral strategy. »  

With the Caisse, all you have to do is add seven zeros to the previous figures to reach the same conclusion. Indeed, the big boss of the Caisse de depot boasted this week of having reported an “added value” of $11 billion during the first half of the year.  

Comment a-t he achieved this financial feat? By “losing” with its half-year return of -7.9% only $33.6 billion, or $11 billion less than the paper loss of -10.5% incurred by “its” benchmark portfolio.  

More positive than that, it's… hard to beat! 


< p>It has to be said that Charles Emond and his portfolio managers nevertheless managed to limit the damage in the context of the severe correction that hit the financial markets during the first half of the year, both on the stock market and on the bond market for negotiable bonds.  

The Caisse generated a return of -7.9%. It is certainly a modest underperformance if we compare this drop to the fall in the stock markets, i.e. -29.2% for the NASDAQ; -20% for the S&P 500; -9.9% for the Toronto S&P/TSX.  

The same is true when comparing the Caisse's half-year underperformance with that of the bond indices: -22.1% for long-term bonds; -16.7% for Quebec bonds; -12.2% for universal bonds; -14.0% for corporate bonds. 

With its six-month return of -7.9%, the Caisse is thus two percentage points ahead of the return obtained by the best diversified mutual funds in equities and bonds traded on the public financial markets.  

It is thanks to the “performance” of its private investments, whether in companies, infrastructures, real estate, etc., that the Caisse has succeeded in outpacing diversified mutual funds.  


On the other hand, when we compare the Caisse's half-year return of -7.9% with that of its peers, that is to say other large pension funds or sovereign wealth funds, the Caisse's managers are called upon to be modest.  

At CPP Investments, managers of the Canada Pension Plan fund, the gigantic portfolio has shrunk by about 7.1% in the first six months of 2022.  

For their part, the managers of Ontario's large municipal employee retirement fund, OMERS, ended the period with a tiny loss of 0.4%.&nbsp ; 

Meanwhile, the Ontario Teachers' Pension Plan (Teachers') managed to post an incredible positive return of 1.2% in that same difficult semester.


Given the high proportion of private investments found in large pension funds and sovereign wealth funds, comparisons are likely to be flawed since the criteria fair market value of such investments will likely differ from fund to fund.

Take our Caisse de depot. The larger the Caisse's portfolio, the more it invests in private investments. The more these private placements gain weight in the Caisse's portfolio, the more difficult it becomes to compare the Caisse's performance. 

It should be noted that the calculation of the fair value of private investments classified as level 3 “is carried out using valuation techniques whose significant inputs are unobservable”, it is indicated in the Caisse investment evaluation policy. However, it adds: “This level includes financial instruments whose valuation is based on the price observed for similar financial instruments, adjusted significantly to reflect the characteristics specific to the financial instrument being valued and the data of market available. »  

As of June 30, Level 3 private investments totaled $196 billion, or half of the Caisse's net assets. This category includes real estate, real estate debt, private placements, infrastructure, fixed income securities, unlisted shares, corporate debt.  

To For comparison, the calculation of the fair value of Level 1 investments (such as publicly traded stocks and marketable bonds) is based on observable prices in active markets. Net worth as of June 30: $142.8 billion. 

For its part, the calculation of the fair value of Level 2 investments is made “using valuation techniques whose significant inputs are observable”, either directly or indirectly. Net worth: $49.5 billion. 

La Caisse de dédé ;pôt and investment ahead of its Canadian peers