UPDATE 1-Quebec pension fund manager Caisse posts strong returns in 2014

Wed Feb 25, 2015 4:16pm EST
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(Adds comments from CEO and details)

By Allison Lampert

MONTREAL Feb 25 (Reuters) - Caisse de depot et Placement du Quebec, Canada's second-largest pension fund manager, reported solid returns for 2014 on Wednesday and said it is counting on strong returns from infrastructure and real estate investments to drive growth in the face of what may be tumultuous market conditions ahead.

The Caisse, which manages public pension plans in the predominantly French-speaking province of Quebec, reported net assets of C$225.9 billion ($181.72 billion) as of Dec. 31, 2014, compared with C$200.1 billion at the end of 2013. Its weighted average return in 2014 was 12 percent.

The Caisse will have difficulty replicating its returns of the past four years given weakening equity markets among other factors, Chief Executive Michael Sabia told reporters.

"This has been four or five years of some pretty remarkable performances," he said at the Caisse's Montreal headquarters. "It's increasingly hard to see how that can continue into the future."

The fund will "invest defensively" in higher-yield assets, and plans to double its spending in infrastructure from C$10 billion to C$20 billion over the next four years.

The United States, where Canadian investors are already very large buyers of real estate, will be a key infrastructure market for the Caisse, Sabia said.

"In geographic terms, this would be priority one," he said. "The U.S. market interests us a lot from an energy-production infrastructure point of view. It interests us from a public infrastructure point of view: for airports, transit and other things where we think the needs are huge."   Continued...