CDPQ posted a 7.2% one-year return and net assets reached $434 billion, up $32 billion

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MONTRÉAL, Feb. 22, 2024 /CNW/ – CDPQ today presented its financial results for the year ended December 31, 2023. The weighted average return on its depositors’ funds was 7.2% in 2023, in line with its benchmark portfolio’s 7.3% return. Over five years, the annualized return was 6.4%, outpacing the 5.9% of the benchmark portfolio, which represents close to $12 billion in value added. Over ten years, the annualized return was 7.4%, also higher than its benchmark portfolio which stood at 6.5%, producing over $28 billion in value added. As at December 31, 2023, CDPQ’s net assets totalled $434 billion.

“The year 2023 was marked by highly volatile bond markets and a historic concentration of gains from a handful of U.S. tech stocks that drove the main stock indexes. Faced with this context, our portfolio performed well, and our depositors’ plans continue to be in excellent financial health,” said Charles Emond, President and Chief Executive Officer of CDPQ.

“Since 2020, investors have had to weather market conditions that ranged from one extreme to the other. In such environments, our portfolio has grown by nearly $100 billion over the period. We may reach a crossroads in the year ahead, with many central banks likely to pivot, but the scope and sequence remain unknown. With a backdrop of downward but persistent inflationary pressure combined with lingering volatility, our portfolio remains well positioned to keep delivering the long-term returns our depositors need,” concluded Charles Emond.

Return highlights

In the past few years, there has been a more pronounced variation in returns, year over year, in most asset classes. This is particularly the case for stock and bond markets, which, following a severe and simultaneous correction in 2022, bolstered CDPQ’s performance in 2023. Following a period of considerable returns, private equity was affected by the sharp rise in rates and the economic slowdown. Impacted by the same economic factors, the Real Estate portfolio—which posted the best return in 2022—also had to contend with structural trends in its industry. The Infrastructure portfolio sustained its momentum of recent years by continuing to provide a good combination of protection against inflation and attractive current returns.

CDPQ manages the funds of 48 depositors and adapts investment strategies to meet their objectives, taking into account their different risk tolerances and investment policies. The portfolio’s one-year, five-year and ten-year returns represent the weighted average of these funds. In 2023, the spread in the returns for CDPQ’s eight main depositors was fairly wide, ranging from 6.3% to 9.3% for one year. Over longer periods, the annualized return on their funds varied between 4.9% and 7.3% over five years, and between 6.2% and 8.3% over ten years.

A chart is available on CDPQ’s website

CDPQ’s investment results totalled $28 billion for one year, $108 billion over five years and $207 billion over ten years.

Fixed Income: Bonds lifted by higher yields, outpace their index

The 2023 bond market was characterized by higher yields and the narrowing of corporate credit spreads. Volatility remained a highlight during the year: 10-year bond yields fluctuated between 3.3% and 5.0%, finishing the year stable in the United States and down 0.2% in Canada. For one year, the asset class posted an 8.1% return, compared with 7.7% for its benchmark index. This return is in part attributable to the portfolio’s positioning in government debt, which benefited from lower rates in certain emerging countries, good execution in corporate credit and premiums on private debt that foster a high current return.

Over five years, the asset class posted a 1.7% annualized return, which was limited by the weaker performance in 2022 in the wake of historic rate hikes, but remains above its index’s 0.8% return. Over the period, it benefited from private credit activities, an important driver of performance, thanks in part to the high current return on this kind of debt and the favourable execution …

Full story available on Benzinga.com


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