Global investment group CDPQ, which manages funds for public pension and insurance plans, has released its financial results for the first half of 2024. It reported a 4.2% return on depositors' funds, slightly below the benchmark portfolio's 4.6%. However, the company achieved an annualized return of 6.0% over the past five years, surpassing its benchmark portfolio's 5.3% and adding nearly $14 billion in value.
Over a ten-year period, CDPQ's returns averaged 7.1% annually, outperforming the benchmark's 6.3%, which added over $26 billion in value. As of June 30, 2024, the company's net assets stood at $452 billion.
CDPQ's president and CEO, Charles Emond, highlighted factors that shaped the first half of the year. This includes strong stock market performance driven by a concentrated number of tech stocks, the U.S. Federal Reserve's delayed rate cuts, and modest global economic growth.
He emphasized the importance of maintaining discipline in the face of market volatility in the second half of the year.
CDPQ's fixed-income portfolio had a -1.7% return in the first half of 2024, matching its benchmark index. Rising long-term bond yields in Canada and the US, due to resilient economic conditions and persistent inflation, offset the high current yield of 3.1% generated by the portfolio. Over five years, the annualized return was 0%, outperforming the benchmark's -0.9%, supported by strong credit activities.
CDPQ’s infrastructure portfolio delivered a 5.3% return during the first half of 2024. It's driven by the transportation and energy sectors, surpassing the benchmark index’s 4.3%. Over five years, the portfolio’s annualized return was 10.2%, which is above the index's 4.5%. This result was bolstered by investments in renewable energy and port assets, which helped mitigate inflation’s impact.
On the other hand, the real estate portfolio faced challenges, particularly in the office sector, leading to a -3.6% return over six months, underperforming the benchmark’s -0.9%. Despite positive contributions from the logistics sector, the portfolio’s performance over five years was -0.6%, trailing the index’s 0.8%.
The equity markets portfolio recorded a 13.6% return in the first half of 2024, slightly above the benchmark’s 13.2%. This result was in part thanks to strong stock selection despite the market being driven by gains in a few tech companies. Over five years, the portfolio’s annualized return was 9.8%, slightly under the index’s 10.5%, mainly due to an underweight in major tech stocks early in the period.
The private equity portfolio returned 6.9% in the first half of 2024, resulting from companies in sectors such as consumer goods, industrials, and finance. Over five years, the portfolio’s annualized return was 14.3%, outpacing the benchmark’s 13.0%, thanks to successful direct investments in key sectors.
