Infra up, but underperforming, for the Caisse in 2012

The Caisse de depot et placement du Quebec (Caisse) credited its infrastructure portfolio with gaining 8.7 percent as the Caisse earned a 9.6 percent annual return for 2012.

The Caisse in 2012 also re-established itself as the largest public pension in Canada, totalling C$176.2 billion ($171.96 billion; €130.88 billion) under management as of December 31, 2012 – up from $159 billion in 2011- to surpass the C$172.6 billion Canada Pension Plan Investment Board (CPPIB).

The Caisse attributed its bulk up to its C$14.9 billion in net investment and C$2.3 billion in net deposits.

Infrastructure, meanwhile, underperformed its 15 percent benchmark index by 6.3 percent.

The Caisse has C$6.3 billion invested in infrastructure and counted C$511 million in net investment for the asset class. The Caisse went on to explain energy boosted its infrastructure portfolio.

The pension went noted its decision to sell 5.63 percent of its ownership in Heathrow Airport Holdings last August was “carried out to rebalance the portfolio […] and to reduce its concentration risk”.

“For this kind of less-liquid asset [infrastructure], performance has to be assessed over a longer period,” the Caisse said, pointing out its infrastructure portfolio has produced an annual return of 26.7 percent after it competed an internal restructuring in 2009.

The Caisse has grouped infrastructure under its ‘inflation-sensitive’ bucket – a C$25 billion allocation that returned 11.1 percent in 2012.

The pension offered that “global demand for infrastructure development” as well as privatisation of public infrastructure in Europe is driving the asset class.

The Caisse is a direct investor in infrastructure, and has characterised its approach to the asset class as long-term.