The Caisse de dépôt et placement du Québec reported a 13.6% return in its annual report for fiscal 2010, which was released today.
“I am pleased to present the 2010 annual report that provides an account of the Caisse’s activities. This annual report allows Quebecers to see our progress and strong results in 2010,” said Caisse president and CEO Michael Sabia, who announced on Feb. 24 that the fund’s 2010 return marked its best single-year gain in five years and outperformed its benchmark by 4.1%. “We still have much work to do but I am convinced that our organization is on track.”
According to the report, nine of the 11 actively managed portfolios outperformed their benchmark index or added value relative to their targets. Since assuming leadership of the Caisse following the fund’s $40 million loss in 2008, Sabia says changes have been made to the portfolio in order to simplify it and increase transparency and flexibility for depositors.
The report outlines how assets with similar characteristics and risk-return profiles were grouped into the same portfolio, and that certain fixed income and equity portfolios are now indexed.
Risk management
It also states that the Caisse has reduced the overall absolute risk of the portfolio by 10% and its active risk by 56%. Risk management tools and practices have been strengthened in order to better identify and quantify risks, and a focus has been placed on increased collaboration between the investment and risk teams.
The Caisse has adopted a new Quebec economic development contribution statement that puts emphasis on identifying and capitalizing on the best business and investment opportunities in the province. Assets in Quebec have been increased by $3 billion, for a total commitment of $36.5 billion by the end of 2010.
Reducing operating expenses
The adoption of a new business model focused on effectively managing operating expenses has led to a reduction in those expenses of 14%, or $45 million, over two years.
Also, 2010 saw the adoption of a new compensation model built around three main objectives:
- Pay for performance while being more demanding than the previous program.
- Offer competitive compensation to attract, motivate and retain employees with experience and expertise that enable the Caisse to achieve its strategic objectives.
- Strike the best risk-return balance and align the interests of management and depositors.
A French version of the 2010 annual report is available at on the fund’s website, with an English version expected soon.
For more information on the Caisse’s investment strategy and performance, look for the Strategy profile in the upcoming May 2011 issue of Benefits Canada.