Quebec pension fund posts negative return, writes off crypto venture

Quebec pension fund reports 7.9% loss Quebec's pension fund manager posted a $33.6 billion loss for first 6 months of 2022.

The Caisse de depot et placement du Quebec reported a loss of 5.6 per cent in 2022, a year marked by a simultaneous decrease in both stock and bond markets.

Net assets declined by $18 billion to $402 billion as of Dec. 31, according to the results released Thursday.

President and CEO Charles Emond stressed that the first half of the year was marked by the worst concurrent correction of stock and bond markets in 50 years.

"Facing this abnormal context, all our asset categories succeeded in surpassing their indexes, even though there were very few places to hide for investors."

Traditionally, bonds offer a certain protection against stock market corrections in a diversified portfolio, but the scale of interest rate hikes sent the bond market downward last year.

The loss of 5.6 per cent is better than the 8.3 per cent decline in its benchmark portfolio, the Caisse noted.

Over a period of five years, the Caisse had an annualized return of 5.8 per cent. Over 10 years, the annualized return was eight per cent.

In 2022, the Caisse made $4 billion in new investments in Quebec. The total value of its assets in Quebec reached $78.4 billion. Last December, Emond announced a new goal of reaching $100 billion in Quebec assets by 2026.

The total cost for internal and external investment management as of Dec. 31 decreased to 48 cents per $100 of average net assets, or 0.48 per cent, down from 0.57 per cent.

The environment is going to become difficult for stock markets, predicted Emond, who said rates will have to go up a bit more to contain stubborn inflation, and there will be an economic slowdown.

"I had said that 2022 would be historically demanding. The year 2023 won't be very different."

Senior vice-president and head of liquid markets Vincent Delisle said investors are nursing hope that central banks will temper their ardour. He said the market isn't ready to swallow the tough pill on offer from central banks, and there's a risk the market will be a little disappointed.

Emond also said the Caisse has given up on cryptocurrencies after its misadventure with Celsius Network. The 2021 investment in a cryptocurrency interest and loan platform evaporated in less than a year, swallowing $200 million.

"We won't do that again," Emond said when asked about how the Caisse will manage cryptocurrency risks in the future.

He added that the Caisse has filed a legal complaint against the platform for "false and misleading information" on its financial situation.

This report by The Canadian Press was first published Feb. 23, 2023.