(Updates with infrastructure assets in fifth paragraph, Quebecor Media stake in 11th.)
Feb. 23 (Bloomberg) -- Caisse de Depot et Placement du Quebec, Canada’s biggest pension fund manager, posted a 4 percent investment return last year, fueled by gains in infrastructure and fixed income.
Net investment income fell to C$5.7 billion ($5.71 billion) from C$17.7 billion a year earlier when the returns were 14 percent, the Montreal-based manager said today in a statement. The Caisse’s assets as of Dec. 31 increased to C$159 billion from C$157.9 billion at the end of June.
The Caisse beat the 0.5 percent return of Canadian pension funds last year, as estimated in a Jan. 23 report by RBC Dexia Investor Services Ltd. Chief Executive Officer Michael Sabia said in August the Caisse wasn’t immune to market turmoil in a “highly uncertain” global economy after disclosing a first- half return of 3.6 percent.
“We managed to navigate through a difficult year,” Sabia said today at a press conference in Montreal. “The Caisse is stronger, more agile today.”
Infrastructure fared best among investment classes last year, returning 23 percent. The Caisse has about C$5.8 billion in infrastructure assets such as airports, hospitals and pipelines. Real-return bonds rose 18 percent, contributing to a 14 percent return for the Caisse’s C$25.2 billion “inflation- sensitive” portfolio.
Fixed-income investments returned 10 percent last year, fueled by a 19 percent gain in long-term bonds. The Caisse has C$58.8 billion invested in fixed income, including C$41.6 billion in bonds and C$6.8 billion in short-term investments.
Equities, the Caisse’s largest asset class with C$72.8 billion, declined 4.2 percent, the pension manager said. Canadian stocks, where the Caisse has C$18.6 billion under management, dropped 11 percent, while the C$8.1 billion portfolio of U.S. stocks returned 4.6 percent.
Canada’s benchmark Standard & Poor’s/TSX Composite Index dropped about 11 percent last year, lagging behind the performance of the Standard & Poor’s 500 Index, which ended the year virtually unchanged.
The Caisse said it has begun an “in-depth review” of its Canadian equity portfolio “to ensure that it is well aligned with the new market conditions.”
Real estate gained 11 percent in 2011, underperforming the 16 percent return of its benchmark. The Caisse, which has C$18.2 billion invested in property, said it plans to spend more than C$700 million for Brazilian malls this year, doubling the value of its real estate holdings in the country.
The value of the Caisse’s stake in Quebecor Media Inc., a Montreal-based cable television and newspaper company, was C$2.3 billion at year-end, Sabia said at the press conference. The pension, which owns 45 percent of Quebecor Media as part of its private equity portfolio, paid about C$3.2 billion for the stake in 2000.
The pension manager is expanding its research teams in areas such as mining and emerging markets, Sabia said at the press conference. The Caisse hired about 50 new people last year and now has about 770 employees, he said.
Liquidity topped C$45 billion as of Dec. 31, the Caisse said. The reserves will enable the fund manager to “meet all its potential obligations, even in the event of a significant market correction.”
Caisse de Depot oversees pensions for retirees in the French-speaking province. The Canada Pension Plan Investment Board, which had C$152.8 billion in assets as of Dec. 31, covers every Canadian province except Quebec.
--Editors: Steven Crabill, Josh Friedman
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