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Caisse de Dépôt et Placement du Québec posted a return on capital of 4.2 percent in the first half of this year, mainly due to the good performance of technology stocks and solid returns from its infrastructure portfolio. Overall, however, it remained below its benchmark.

“The first half of the year was marked by a number of factors: strong equity market performance that continued to be linked to a historic concentration in a handful of technology stocks, the postponement of many Federal Reserve rate cuts that were expected at the start of the year, and modest global economic growth,” said CEO Charles Emond in a press release. “Discipline will continue to be called for, as the second half of the year has already seen its share of twists and turns and volatility.”

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The investment return lagged behind the fund’s benchmark of 4.6 percent in the first half of the year. Over a five-year period, the fund’s annualized average return of six percent is still above the benchmark portfolio’s return of 5.3 percent.

The Caisse’s net assets totaled $452 billion as of June 30, 2024, compared to $424 billion in the same period last year.

The returns were mainly due to the strength of the equity and private equity portfolios.

The equity portfolio returned 13.6 percent over the six-month period, outperforming the benchmark equity index’s return of 13.2 percent. The performance was driven by a strong rise in major US stocks. In the private equity sector, the portfolio returned 6.9 percent.

“The numbers speak for themselves,” said Vincent Delisle, senior vice president at the Caisse, during a press conference in Montreal, calling the S&P 500’s year-to-date gains, which peaked at nearly 20 percent in July, “quite astonishing.”

The infrastructure portfolio achieved a return of 5.3 percent in the first half of 2024, above its benchmark index of 4.3 percent. Over the last five years, the annualized return of 10.2 percent was significantly higher than the benchmark index return of 4.5 percent.

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“Given the circumstances of recent years, the portfolio played an important role in limiting the impact of high inflation on the overall portfolio,” the press release said.

However, the Caisse’s real estate portfolio recorded a loss of 3.6 percent in the first half of this year. This was due to the difficulties facing the industry, particularly the office sector, and the high interest rate environment, which weighed on financing costs.

“This sector has not been able to regain its levels since the pandemic,” Emond said during the press conference. “What I want to emphasize is that, as you know, we started rebalancing in 2020. We bought more residential properties, which were more promising, and our exposure to offices and shopping centers, which are facing some headwinds, has decreased.”

The Caisse’s fixed-income portfolio lost 1.7 percent in the first half of this year, reflecting the difficult environment for bonds. The pension fund reported a current yield of 3.1 percent, but higher interest rates dampened any gains.

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Overall, Emond said he remained satisfied with the fund’s performance given the difficult economic environment of the past six months. However, he warned that the Caisse would continue its diversification for the rest of the year due to increasing economic uncertainty.

“What I like about these results is that we have a well-diversified portfolio that is performing to expectations in the current context,” he said. “We need to manage our risks well, where there are good investment themes, where there are tailwinds, and be alert to geopolitical tensions.”

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