The real assets portfolio of Caisse de depot et placement du Quebec (CDPQ) outperformed its benchmark by 6.5 percentage points in 2023, after a strong performance in its infrastructure portfolio helped offset negative returns from real estate.
The Canadian institution鈥檚 C$59.8bn (鈧�40.5bn) infrastructure portfolio at the end of 2023 generated a 9.6% return against the index鈥檚 0.3%, with the C$45.6bn real estate portfolio recording a -6.2% return against the benchmark鈥檚 -10% during the same period ending 31 December.
The real assets portfolio, which is composed of the real estate and infrastructure portfolios, recorded a one-year return of 2.2% compared with the benchmarks -4.3% return at the end of 2023.
CDPQ, which placed second on the 91传媒在线 Top 100 infrastructure investors 2023 rankings, said assets in essential sectors such as transportation and renewable energy were among the performance drivers.
鈥淲ith slower transaction activity in 2023, the team remained disciplined in managing its portfolio, both in selecting acquisitions and in sales and syndication activities,鈥� it said.
The market was more difficult for real estate in 2023, which is reflected by the benchmark index鈥檚 -10% one-year return.
鈥淒espite economic challenges and structural issues in some sectors such as offices, the real estate portfolio demonstrated more resilience, and the repositioning toward promising sectors such as logistics that began in 2020 mitigated the decrease in value. As such, the portfolio recorded a -6.2% return for one year, above its index,鈥� the Canadian investor said.
In 2023, teams remained selective in the slowest transactional market in 15 years, with acquisitions in promising sectors of the future aligned with the portfolio鈥檚 evolution, as well as disciplined dispositions, CDPQ added.
Over five years, real estate鈥檚 annualised return was -0.5%, compared with 0.8% for the index, notably due to the portfolio鈥檚 overweighting in Canadian shopping centres at the beginning of the period.
鈥淭he strategic repositioning over the last few years, which represented around 300 transactions totalling over C$50bn, is nevertheless bearing fruit: since the pivot, C$5.5bn in value-added has been generated compared with the benchmark index,鈥� it said.
Earlier this year, CDPQ announced the integration of its real estate subsidiaries and Ot茅ra Capital, a move it said will 鈥漞nable greater focus on investment expertise and generate agility and efficiency gains鈥�.
Ivanho茅 Cambridge placed seventh on the 91传媒在线 Top 150 real estate investors 2023 rankings.
CDPQ鈥檚 overall C$434bn (鈧�294.3bn) portfolio, which includes fixed income and equities, recorded a return of 7.2% in 2023 compared with the benchmark portfolio鈥檚 7.3% return.
Charles Emond, president and CEO of CDPQ, said 2023 was marked by highly volatile bond markets and a historic concentration of gains from a handful of US tech stocks that drove the main stock indexes.
鈥淔aced with this context, our portfolio performed well, and our depositors鈥� plans continue to be in excellent financial health.鈥�
Emond added: 鈥淪ince 2020, investors have had to weather market conditions that ranged from one extreme to the other. In such environments, our portfolio has grown by nearly C$100bn over the period. We may reach a crossroads in the year ahead, with many central banks likely to pivot, but the scope and sequence remain unknown.
鈥淲ith a backdrop of downward but persistent inflationary pressure combined with lingering volatility, our portfolio remains well positioned to keep delivering the long-term returns our depositors need.鈥�
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