Caisse de Depot et Placement du Quebec, Montreal, plans to increase its investments in “less liquid” assets, such as real estate, infrastructure and private equity, and boost its global quality public equity allocation, said Roland Lescure, executive vice president and chief investment officer.
Caisse, which manages C$176 billion (US$169.6 billion) in assets for pension funds and other clients, is not setting targets in each category but expects to raise its less-liquid portfolio to around 33% in the next two to three years, from 25% currently, Mr. Lescure said. The quality global equity allocation, comprising 70 to 80 global stocks, will increase to about 10% from the current 5% in the next 18 months, he said.
Funding for the increase in less-liquid assets will come from reducing the 35% of assets currently in fixed income, Mr. Lescure said. “We don't hate fixed income,” Mr. Lescure said, “but fixed income is hating us. At best, we expect over the next 10 years to get 2% to 3% per annum. We must do better.”
The “main mission” of its fixed-income allocation, in traditional core bond investments, is to cover liabilities and to provide liquidity and hedge against inflation, Mr. Lescure said. “We'll still keep a big chunk in fixed income,” he said.
The holdings in its global public equity portfolio are managed with a long investment horizon “as if they were private equity, less as traditional equities,” Mr. Lescure said. Funding for the increase will come from its 35% traditional public equity allocation.
Mr. Lescure said there would be few, if any, changes in external managers as a result of the changes. Most of the less-liquid and global quality equity portfolios are managed internally.