Charles Émond, President and CEO of the Caisse de dépôt et placement du Québec
The Caisse de dépôt et placement du Québec (CDPQ) will have to knit tight to close the hole that is #x27;is open in the wool socks of Quebecers after the worst semester of the last 50 years on the markets.
As of June 30, the Caisse recorded, for the first six months of 2022, a negative return of -7.9%, or a loss of $33.6 billion. Although the institution did better than its benchmark, which was down -10.5%, this result contrasts with the exceptional return of 13.5% posted for the whole of 2021.< /p>
Including deposits, the Caisse's net assets fell by $28.2 billion, from $420 billion to $392 billion.
The President and Chief Executive Officer of Caisse de deposit and placement of Quebec, Charles Émond, was still reassuring about the state of the Caisse's finances.
The President and Chief Executive Officer of the Caisse, Charles Émond, however, wanted to reassure Quebec savers by presenting these results on Wednesday, stressing that the capitalization of the plans is solid. I always step back as CEO of the Caisse to reassure people: their pension is not at risk. The plans are fully funded, even after those cuts. And for the two years that there have been these atypical conditions with a pandemic, a war, rate hikes, inflation […] we have increased our assets for two years by 60 billion dollars. So there is no crisis right now for people to be worried about.
Also, he said, the strong rebound in markets since June 30 has already erased half of that loss.
“You mean volatility? Half of the decline in value we saw in six months, half was recovered in a little over a month. »
— Charles Émond, President and Chief Executive Officer of the Caisse de dépôt et placement du Québec
If this trend were to continue, it would allow the Caisse to significantly improve its results. July turned out to be the best month for the markets in two years.
Negative return of -7.9% and delisting of investments in the Celsius Networks cryptocurrency exchange. Interview with Charles Émond, CEO of the Caisse de dépôt et placement du Québec.
But, like all investors, the Caisse could not escape an atypical context, marked by unforeseen events and instability with the pandemic, the war in Ukraine, the surge of inflation and the sudden rise in interest rates. The worst element, however, was the parallel plunge in stocks and bonds.
“It's the worst semester in 50 years for stock and bond markets. This is a correction that is extremely rare because it is simultaneous. There were very few places to invest without there being a downside. »
— Charles Émond, President and Chief Executive Officer of the Caisse de depot et placement du Québec
The institution is also careful to remember that its result is not only higher than that of its benchmark index, but that over the 5 and 10-year periods, the return is still 6.1% respectively. and 8.3%.
If we had done the same as our benchmark portfolio for the past two years, we would be at $364 billion in assets, whereas our assets today, which we report, are at $392 billion. dollars [it had even risen to 405 billion dollars as of Wednesday, according to Mr. Émond]. We have continued for two years to be in a series of extreme conditions, but the Fund has managed to perform well during these two years.
The news is not gloomy in all sectors: on the real assets side, the Real Estate and Infrastructure portfolios report positive returns of 10.2% and 5.8% respectively. It should be noted, however, that the Real Estate portfolio is one of the few to have performed below the benchmark portfolio, which stands at 11.4%.
C' x27; is on the equities side of the coin. Thus, the return on the private equity portfolio was down 2.4%. But it was above all the equity portfolio that plunged for the first six months of 2022 with a decline of 16%.
Since the rise in July cannot be seen as a sign of what is to come, Charles Émond ensures that the Caisse remains vigilant. We will see how the rates will evolve. The posture of central banks to regain control of inflation will be essential. We are on a geopolitical chessboard that is very fragile with significant repercussions for investors. In addition, there are fears of an economic slowdown, and in some places even recession, he noted, illustrating that any attempt at prediction would be futile in such an unstable environment.