The Caisse de dépôt et placement du Québec generated an average return of negative 7.9 per cent for the first half of 2022.
The investment organization reached the mid-year point with $392 billion in net assets, down from $420.2 billion at the end of the previous quarter. This $28.2 billion decrease consisted of a net loss of $33.6 billion and $5.4 billion in net contributions. As a result of the performance, the Caisse’s five- and 10-year annualized returns dipped to 6.1 per cent and 8.3 per cent, respectively.
“The first six months of the year were very challenging,” said Charles Emond, president and chief executive officer of the Caisse, in a press release. “The mix of factors we faced had not been witnessed in several decades: spiking inflation that triggered rapid and sharp interest rate hikes, rare simultaneous corrections in both stock and bond markets, fears of an economic downturn and the war in Ukraine with its many collateral effects.”
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The Caisse’s fixed income portfolio experienced particularly severe losses, returning negative 13.1 per cent during the six-month period. Its public equity portfolio also fell short of average returns, generating losses of 16 per cent.
Its alternative allocations performed better than traditional assets, with the private equity portfolio returning negative 2.4 per cent. The real estate and infrastructure portfolios saw gains, with returns of 10.2 per cent and 5.8 per cent, respectively.
Despite the overall losses, the Caisse said it wouldn’t pursue a major shift in its long-term strategy. However, Emond indicated it would be paying close attention to central banks’ actions in containing inflation and how that impacts the economy. “Our portfolio continues to be robust and we remain disciplined in order to perform well in different market conditions.”
Read: Caisse posts 7.7% return in 2020 as real estate underperforms