The Caisse de dépôt et placement du Québec posted a drop of 2.3% during the first six months of the year. Nothing catastrophic, but …
Note that this is significantly lower than the 1.6% return that Joe Bleau would have reported with a simplistic portfolio made up of three index funds traded on the Toronto Stock Exchange, at a rate of 50% of the iShares portfolio of XBB Canadian Bond (FTSE Canada Universe Index), 25% of the portfolio in iShares Canadian Equity XIC (S & P / TSX Toronto Index) and 25% in iShares Global Equity XWD (MSCI World Index).
Another comparison showing that the managers of the Caisse had a hard time in the first half of the year: the median semi-annual return of the diversified funds of Canadian pension funds is -0.82%, compared to -2.3% for the Caisse.
SABIA vs ÉMOND
Michael Sabia joined the Caisse in the depths of the 2008-2009 crisis, and left the boat at the top of the markets, which allowed him to post a solid performance during his reign.
Started on 1is February, at the top of the markets, his successor, Charles Émond, is not in the same vein. No sooner had he worn the CEO hat than the economy was being hit by an unprecedented economic and financial crisis in the wake of the COVID-19 pandemic.
Like all institutional investors, the Caisse suffered the repercussions.
DIVERSION
When a portfolio manager puts a lot of emphasis on historical performance, it usually does not bode well for the short-term performance he is about to reveal.
And this is the strategy on which the Caisse bet yesterday when its results were released.
In the title of its press release yesterday on its results for the first half of 2020, the Caisse only talks about the annualized return over … five years.
“The Caisse has posted a return of 6.3% over five years. “
Second priority information in the eyes of the Fund: its annualized return over ten years. “A yield of 8.7% over 10 years, greater than the needs of its depositors,” she indicates in the second line of the press release!
It is only in the third row that the Caisse finally reveals the result of its performance in the first half of 2020: “A return of -2.3% over six months, during a first half marked by an unprecedented economic crisis. “
When we know that the ultimate goal of distributing this press release was to inform us of the Caisse’s results during the first six months of the year, we agree that it is the half-year return that should have been prioritized.
With this press release “showcasing” the five- and ten-year annualized return, Charles Émond looks like the CEO who is using Michael Sabia’s previous good performance to boost himself.
He doesn’t need that to prove himself.
RECOVERY MEASURES
The Fund’s assets shrank by $ 7 billion in the first six months of the year, from 340 billion to 333 billion.
Here is the package of measures that Charles Émond has put forward to redress the gigantic portfolio of the Caisse during this period of crisis.
- In-depth review of assets with a view to establishing promising sectors and potential risks.
- Redefining the post-COVID-19 placement strategy.
- Prudent and tight management of liquidity.
- Comprehensive assessment of refinancing needs, among others for less liquid assets, infrastructure and private placements outside Quebec.
- Acceleration of the repositioning of the real estate portfolio, mainly in the shopping center sector.
- Implementation of a “new transversal approach” in technologies.
- Rigorous deployment in fixed income, with an emphasis on quality bonds.
- Multi-billion dollar acquisitions in the equity markets in March and April, following the significant market correction.
We have to believe that the recovery measures have had a positive impact since the Fund would have succeeded since the end of June in wiping out its losses.
–
