MONTREAL (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.”
The Caisse said it plans to expand the asset base of its real estate arm, Ivanhoe Cambridge, to C$60 billion by 2018 from its current level of just over C$42 billion. Ivanhoe Cambridge, is already one of the world’s 10 largest property investors with
assets spread across Canada, the United States, Europe, Brazil and Asia.
“Our portfolio has shown its resilience in the face of increased volatility brought about by the collapse in oil prices, the continued decline in interest rates and the strong appreciation of the U.S. dollar,” Sabia said. “Our strategy is clear: tangible assets and projects, high-quality securities with more stability and less risk, increased exposure to global growth and a meaningful impact in Quebec.”
Reporting By Allison Lampert; Editing by Nick Zieminski and Peter Galloway