| Industry | Pension fund |
|---|---|
| Founded | 1965 |
| Headquarters | 65, rue Sainte-Anne Quebec City, Quebec G1R 3X5 |
| Key people | Michael Sabia |
| Total assets | $151.7 billion CAD (2011) |
| Website | www.lacaisse.com |
The Caisse de dépôt et placement du Québec (CDPQ) manages public pension plans in the Canadian province of Quebec. It was founded in 1965 by an act of the National Assembly. The name translates to Quebec Deposit and Investment Fund, but it is referred to by its full French name or as "the Caisse" in English.[1]
The Caisse is headquartered in Quebec City in the Price building and has its major business office in Montreal in the Quartier International de Montreal.
The Caisse's large holdings make it a formidable player in investment markets. It is the second largest pension fund in Canada, with the Canada Pension Plan (CPP) in first place. As of November, 2011, the Caisse’s total assets under management amounted to CA$151.7 billion.
Jean-Claude Scraire spent 22 years with the Caisse de dépôt et placement du Québec. He stepped down in 2002 after eight years as CEO of Canada’s biggest pension fund, which at the time managed more than $140 billion in assets.[2]
Henri-Paul Rousseau, who previously headed Laurentian Bank, served as the Caisse's President and CEO from 2002 to mid 2008, when he left to become a vice chairman at the Power Corporation of Canada. His successor was the fund's second-in-command and CIO (Chief Investment Officer), Richard Guay, who only served as CEO for four months before abruptly resigning on stress leave. The board chairman Pierre Brunet, a former head of National Bank of Canada securities prior to joining the Caisse, did not have his mandate renewed. [3]
Under Rousseau's tenure, there was a dramatic shift in the investment objectives. The fund became a major player in derivatives, invested heavily in non-bank asset-backed commercial paper (ABCP). It also adopted aggressive currency hedging as an investment strategy in itself, rather than as a strictly defensive measure to protect itself against swings in the exchange rate. In the financial crisis of 2007–2010, all of those strategies backfired against the Caisse, adding to the significant stock market losses that the Caisse and other pension funds suffered. Additional writedowns on the Caisse's remaining holding of $12.6-billion in ABCP and losses on dollar hedging and futures contracts led to the fund's assets to drop by $39.8 billion CAD.[3]
The $39.8 billion loss is a minus-26-per-cent return, making it the worst in the Caisse's 43-year history (In 2002, the Caisse had suffered a minus-9.4-per-cent return, its second worst year). Other large pension funds in Canada were projected to report a minus-18.5-per-cent loss for 2008.[3] The 2008 annual report of the Caisse show that zero bonuses were paid for 2008. [4]
On September 11, 2009, the rating agency Moody's has affirmed the Aaa long-term and Prime-1 short-term credit ratings of CDP Financial and has maintained its “stable outlook”. These ratings are the highest assigned by the agency.[5]
In August, after $5.7 billion in losses wiped out other gains during the first half of 2009,[6] the Caisse is set to post a return on investments of about 5 percent to 6 percent this year, compared with an average gain of 10 percent to 12 percent for Canadian pension funds.[7]
The Caisse was created in the 1960s on the advice of economist (and future Premier) Jacques Parizeau.
In the 1967 annual report, then Caisse chairman Claude Prieur wrote: “Between two investments of similar quality and price, the one that seems most susceptible of favouring the economic development of the province is preferred, even if, in doing so, it is necessary to sacrifice somewhat the diversification of the portfolio.”[8]
When Rousseau took over from Jean-Claude Scraire as the CEO of the Caisse, he steered the fund away from its traditional role of favouring Quebec businesses, making returns the first priority. This surprised many observers, as Rousseau had been a strong Quebec nationalist, once leading a pro-sovereignty group called Les Économistes pour le OUI, and being a close friend of former Parti Québécois premier Lucien Bouchard. And during the time that he headed Laurentian Bank, he criticised then-Caisse CEO Jean-Claude Scraire for not investing more of Quebeckers' pension money in Laurentian Bank shares. However, when Jean Charest became premier in 2003, he passed legislation that explicitly spelled out the Caisse's mandate for the first time. The law stipulated the Caisse is to seek “optimal” returns “while at the same time contributing to Quebec's economic development.” [8]
Quebec Premier Jean Charest came under heavy fire when the $39.8 billion loss was revealed, with some accusing him of calling the 2008 snap election prior to the Caisse's troubles becoming public.[9][10]
Some suggested that there was too much political influence on the Caisse, with the board of directors being appointed by the province. Chairman Pierre Brunet said that the CEO "has to understand the Quebec environment" and requires a "a thorough knowledge of the socioeconomic and political issues of Quebec." The Caisse is still beholden to its legacy as a creation of the Quiet Revolution.[11]