Quebec’s Caisse Plots Credit Hiring Spree, Infrastructure Bets

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Canada’s second-largest pension manager is planning to boost investments in private credit and infrastructure after reaping big gains in equities in the first half of the year.

The plan for Caisse de Depot et Placement du Quebec includes adding personnel. “We’re looking to hire in private debt, and the other area where we’ve hired the most is infrastructure, as we actually plan to nearly double this for the next two to three years,” Caisse Chief Executive Officer Charles Emond said Wednesday in an interview. 

Caisse manages C$389.7 billion ($306 billion) in pension and insurance money on behalf of the Quebec government, which runs its own universal pension plan. It posted a 5.6% return in the first six months thanks to a 12.1% gain in private and public equities, which offset a small loss in the bond portfolio.

Quebec’s Caisse Plots Credit Hiring Spree, Infrastructure Bets

About two-thirds of its fixed income assets are now in private credit, Emond said, a shift that has included real estate loans and credit for infrastructure projects and businesses. 

“I’m not the least worried about this portfolio because it’s one of the most stable,” he said. “Without sticking my neck out too much, this portfolio is already turning the tide and entering net positive territory.”

Quebec’s Caisse Plots Credit Hiring Spree, Infrastructure Bets

The pension fund said Wednesday that its real assets portfolio, which includes both infrastructure and real estate, rose 4.1% in the first six months of this year, beating its benchmark of 0.4%, mainly on the strength of returns in logistics assets, renewable energy and telecommunications. 

‘Too Defensive’

Caisse has also changed its approach to stock markets after being too defensive, Emond said. It’s now trying to find a “better balance” between value, growth and quality stocks, and has added exposure to growth companies, he said.

The fund has doubled its position in technology stocks, to C$8 billion, he said, which translates into 7% of the public stock portfolio versus 3% previously. That compares with a 10% weighting in technology stocks in the fund’s benchmark. 

“I wouldn’t characterize us as risk-takers. We may have been slightly too defensive, applying the same strategy in all market environments,” Emond said. 

In technology, “some of those stocks have high valuations,” Emond said. “I thought it was risky to ignore those. And at the same time, we’re not chasing them to just exactly be in line with the index, as we have our own conviction.”

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