Quebec pension fund suffers from too many shopping malls, not enough technology

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The Caisse de Dépôt et Placement du Québec posted a loss of 2.3% in the first half of 2020 after largely missing the rally of major technology stocks and suffering from its strong exposure to shopping centers.Canada’s second-largest pension manager underperformed its benchmark, which was up 0.8% during the half-year, the company said in a statement Friday. The fund returned 6.1 percent over the same period a year earlier. Net assets were $ 333 billion (US $ 249 billion) as of June 30, compared to $ 340 billion at the end of the year.

The fund attributed its performance to its strong exposure to shopping centers and to “the underweighting of the stock portfolio in certain large technology stocks,” La Caisse said in the press release. The fund, owned by the Government of Quebec, has a large collection of shopping centers in Canada and Brazil through its subsidiary Ivanhoé Cambridge.

“We need to make sure our portfolio goes digital to keep up with the economy,” Caisse CEO Charles Emond said in a conference call with reporters. He said the Fund will hold discussions with the entities for which it manages the money, including the province’s public pension fund and insurance funds.

Over 10 years, the annualized return of the CDPQ was 8.7% compared to 8.4% for its benchmark portfolio. Over five years, the annualized return of the CDPQ was 6.3%, slightly higher than 6.2% of its benchmark.

The fund wrote off an investment in Cirque du Soleil Entertainment Group after the live entertainment company filed for restructuring under Canada’s creditors protection law.

“You have a business here that is currently totally closed, and probably will be for a longer future,” Emond said. Looking at the books, it was “obvious” that the pension fund had to take a hit on its $ 170 million investment, he added. The Caisse held a 20% interest in Cirque when it was filed.



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