CDPQ posted a 9.4% return in 2024, net assets increased nearly $40 billion to $473 billion

• The base plan of the Québec Pension Plan, which represents the pensions of more than six million Quebecers and is the largest fund invested with CDPQ, posted a return of 11.0%
• The financial health of depositors' plans remains excellent
• Investments in Québec reached $93 billion, on the way to achieving the ambition of $100 billion in 2026

MONTRÉAL, Feb. 26, 2025 /CNW/ - CDPQ today presented its financial results for the year ended December 31, 2024. The weighted average return on its depositors' funds was 9.4% for one year, below its benchmark portfolio's 11.8% return. Over five years, the annualized return was 6.2%, above the 5.9% return of its benchmark portfolio. Over ten years, it earned 7.1%, also above the benchmark portfolio's 6.5%. As at December 31, 2024, CDPQ's net assets totalled $473 billion.

"The 2024 market environment was characterized by the vitality of the U.S. economy, rising long-term bond yields and a historic level of concentration in the main stock indexes, boosted by technology companies. During this period, our performance was driven by our equity market, private equity and infrastructure activities, but was affected by persistent headwinds in real estate, particularly in the U.S. office sector," said Charles Emond, President and Chief Executive Officer of CDPQ. "For one year, the Québec Pension Plan, which represents the pensions of more than six million Quebecers, posted a return of 11.0%."

"While uncertainty is high, particularly due to ongoing tariff negotiations, discipline and the sound diversification of our portfolio will remain key to delivering the long-term returns our depositors need. Their plans remain in excellent financial health, and our results for one, five and ten years have made a significant contribution, despite the turbulence," concluded Mr. Emond.

RETURN HIGHLIGHTS

As at December 31, 2024, CDPQ's investment results totalled $40 billion for one year, $116 billion over five years and $223 billion over ten years.

CDPQ manages the funds of 48 depositors—mainly for pension and insurance plans. The overall portfolio's one-year, five-year and ten-year returns represent the weighted average of these funds. To meet their objectives, investment strategies are adapted to their individual risk tolerances and investment policies. In 2024, there was a pronounced difference between the returns of the nine largest funds of CDPQ's depositors, reflecting variations in their asset allocation choices. For one year, the returns ranged from 6.7% to 11.1%. Over longer periods, the annualized returns varied between 4.2% and 7.3% over five years, and between 5.7% and 8.1% over ten years.

The largest fund invested with CDPQ, the base plan of the Québec Pension Plan, administered by Retraite Québec, posted a return of 11.0% for one year, 7.3% over five years and 8.1% over ten years. As at December 31, 2024, its net assets were $142 billion, including the additional plan.

Returns by asset class

A chart is available on CDPQ's website

It is worth noting in 2024 the significant impact that the customized rate exposure product—a tool depositors have been using increasingly in the last two years—had on the overall portfolio's performance. This product provides depositors with an opportunity to be more exposed to the rate factor, in particular to ensure better matching with their long-term liabilities, thereby providing more stability to the funding of their plan, but making the return on their funds more sensitive to rate fluctuations.

With rising rates as seen in recent years, these activities have limited the performance of CDPQ's overall portfolio. Conversely, depositor plan liabilities declined in general, which, combined with the return on assets, improved their financial health.

Equities

Equity Markets: Excellent performance in markets where gains remain highly concentrated

Against a backdrop of surging stock market indexes whose gains remain very concentrated in U.S. tech stocks, the Equity Markets portfolio has done well while holding the course on a diversified approach. In 2024, the portfolio was the main performance driver among CDPQ's major portfolios. It recorded a 25.5% return and surpassed its benchmark index's 24.1%. The performance is explained by the quality of execution by portfolio managers. The portfolio has also benefited from increased exposure in recent years to growth and tech stocks, propelled by advances in artificial intelligence.

Over five years, the portfolio's annualized return was 10.5%, below the index's 11.1% return. The difference is mainly explained by its significant underweighting in major U.S. tech stocks in 2020.

Private Equity: Strong recovery due to companies' growth

After being affected by the high interest rate environment in 2023, the Private Equity portfolio rebounded in 2024. For the one-year period, it generated a 17.2% return, thanks to sustained growth in the profitability of portfolio companies, particularly in the industrials and consumer goods sectors. Its index recorded a higher return, at 20.8%, reflecting its greater exposure to public markets driven by large tech companies.

Over five years, the allocation to the financial, consumer goods and technology sectors, combined with an advantageous positioning in Québec, allowed the portfolio to post an annualized return of 15.4%, compared to 14.1% for its index.

Fixed Income: Hike in long-term rates slows performance

Despite a context of monetary easing that resulted in the main central banks cutting key rates, U.S. bond yields moved in the opposite direction in 2024. Economic vitality in the United States and uncertainties surrounding the fiscal and trade policies favoured by the country's new administration led to a significant increase in long-term rates. In this environment, the Fixed Income asset class posted a 1.3% one-year return, slightly below the index's 1.4%. The current yield was high, at 6.2%, benefiting from the high premiums on private credit. However, performance was affected by the impact of higher rates.

Over five years, the asset class posted an annualized return of 0.2%, due to the historic market correction in 2022 which is still being felt, compared to the index, which was at -0.5%. The good performance of credit activities over the period compensated for the decline in value.

Real Assets

Infrastructure: A portfolio that delivers year after year 

The Infrastructure portfolio continued to deliver solid results in 2024, with a 9.5% return supported by the excellent performance of port and energy assets, as well as high current yield. With a return of 15.0%, the index was driven by the public stocks included in it, particularly in the energy and electricity sectors, with the latter rising strongly during the year, stimulated by the needs related to the outlook in artificial intelligence. In a very competitive market, the teams executed transactions in a disciplined manner during the year, including significant sales in the airport sector in Europe and additional investments in high-performing companies.

Over five years, the annualized return was 10.0%, against the index's 5.4% return. The portfolio benefited from good asset diversification and consistent current yield. Renewable energy, ports and telecommunications were the largest contributors to performance.

Real Estate: Longstanding exposure to U.S. office sector weighs on performance

Challenges in the real estate industry continued in 2024, mainly due to persistent issues in the office sector. Holding more office building assets in the United States than its benchmark index, and with a strong concentration in New York and Chicago, the two hardest-hit cities, the portfolio posted a -10.8% one-year return, below its index's 1.0%. In contrast, the logistics sector, despite a global slowdown, has been resilient, as has the shopping centre sector, where teams have made strategic dispositions since 2020 and invested in well-positioned assets in the portfolio.

Over five years, the portfolio's annualized return was -2.2%, below the index's 0.7% return. The negative performance is again explained by the longstanding concentration in the U.S. office sector and by overexposure to shopping centres at the beginning of the period. However, the exposure to logistics, which has increased over five years, was profitable during the period.

Québec: Ongoing team mobilization supports businesses and projects that contribute to economic development

In 2024, CDPQ deployed $4.3 billion in new investments and commitments, increasing its assets in Québec to $93 billion. This progress is still in line with its ambition, announced two years ago, to reach $100 billion in 2026 and reflects the mobilization of teams across all asset classes. 

Among the teams' accomplishments during the year, we note:

Support to grow companies 

• A $500-million investment to support National Bank in its structuring acquisition of Canadian Western Bank
• Support for Nuvei, one of the most advanced technology providers in the global payments industry, in its transformation into a privately held company, bringing its value to over USD 6 billion
• Acquisition of an equity stake in QSL International, a key maritime logistics player headquartered in Québec City
• A $158-million investment in WSP to support the acquisition of U.S.-based POWER Engineers
• An increased stake in Saputo, one of the world's largest dairy processors, through a $378-million share purchase that makes CDPQ one of the largest shareholders
• A $25-million investment in the initial public offering of Groupe Dynamite, a clothing retailer with approximately 300 stores, with ambitions for international growth

Infrastructure and real estate projects

• Agreements between the Government of Québec, CDPQ Infra and Québec City to plan the TramCité project, including the tramway component of Phase 1 of the CITÉ plan
• Continuation of dynamic testing on the Deux-Montagnes and Anse-à-l'Orme branches of the Réseau express métropolitain (REM) and planning for the next commissioning of the network in fall 2025
• A $103-million loan to support the expansion of Vantage Data Centers'facility in Québec City

Transition toward a more sustainable economy

• Financial backing for Norda Stelo, a renowned engineering firm operating in more than 50 countries, for its acquisition of InnovExplo, creating a new force in the field of critical minerals that are essential to the energy transition
• A $35-million commitment to MKB Partners Fund III, created by MKB, a growth capital firm that invests in pioneering energy transition companies

In addition, at the end of 2023, CDPQ announced its ambition to more than double the size of amounts entrusted to external Québec managers to reach $8 billion by 2028, thereby promoting the growth of Québec's asset management industry. As at December 31, 2024, these amounts were $4.8 billion.

Capital aligned with a sustainable strategy

In 2024, through its initiatives, including advancing its climate strategy, and international honours, CDPQ continued to exercise strong leadership in sustainable investing.

A few examples:

• For a second straight year, CDPQ ranked at the top of the list of pension funds included in Global SWF's 2024 GSR Scoreboard, an internationally recognized benchmark, which assesses the governance, sustainability and resilience practices of 200 sovereign wealth and pension funds worldwide
  
  
• CDPQ ranked 4th on sustainability and transparency issues in a list of 75 international investment funds established by Top1000funds.com and CEM Benchmarking
  
  
• More recently, CDPQ ranked 2nd among nearly sixty pension funds on the World Benchmarking Alliance's Financial System Benchmark, which assesses best practices in sustainable finance

More details on CDPQ's sustainable investing strategy, notably on its progress on climate targets, will be presented in the Sustainable Investing Report published in the spring.

FINANCIAL REPORTING
CDPQ incurs costs to conduct its activities, including operating expenses, external management fees and transaction costs. As at December 31, 2024, the total cost for internal and external investment management following the integration of the real estate subsidiaries is down considerably, standing at 67 cents per $100 of average net assets, compared to 83 cents per $100 of average net assets in 2023. The 2023 amounts have been adjusted to include the costs of real estate subsidiaries in order to make them comparable to the 2024 amounts. This total is down from the previous year due to efforts made following the integration of real estate subsidiaries during the year and lower external management fees compared to those paid in 2023. It should be noted that, based on external data, CDPQ's cost ratio is among the lowest in its industry. Operating expenses were 23 cents per $100 of average net assets for 2024, compared to 26 cents in 2023, on a comparable basis.

The credit rating agencies reaffirmed CDPQ's investment-grade ratings with a stable outlook, namely AAA (DBRS), AAA (S&P), Aaa (Moody's) and AAA (Fitch Ratings).

ABOUT CDPQ
At CDPQ, we invest constructively to generate sustainable returns over the long term. As a global investment group managing funds for public pension and insurance plans, we work alongside our partners to build enterprises that drive performance and progress. We are active in the major financial markets, private equity, infrastructure, real estate and private debt. As at December 31, 2024, CDPQ's net assets totalled CAD 473 billion. For more information, visit cdpq.com, consult our LinkedIn or Instagram pages, or follow us on X.

CDPQ is a registered trademark owned by Caisse de dépôt et placement du Québec and licensed for use by its subsidiaries. 

For more information
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RETURNS

A chart is available on CDPQ's website

SOURCE CDPQ