In an update of its results to 30 June 2023, the fund that runs the Quebec pension plan (Caisse de dépôt et placement du Québec - CDPQ) said it had recorded an average return of 4.2 per cent.

This return is in line with its benchmark index of 4.1 per cent.

Over five and ten years, Quebecers' portfolios have returned 6.0 per cent and 7.9 per cent, respectively.

These two values are higher than the CDPQ's benchmarks, which are 5.0 per cent over five years and 7.0 per cent over 10 years.

In the documents presenting its updated financial results filed on Wednesday morning, the CDPQ indicates that June 30, 2023, the returns of its eight largest depositors ranged from 3.8 to 5.2 per cent over six months. Over five years, their annualized returns vary between 4.4 and 6.8 per cent, and over ten years, between 6.5 and 8.9 per cent.

"Over the last three years, we have been developing our portfolio to continue to increase our ability to cope with market volatility. In this context, we have generated returns that enable us to ensure the financial health of our depositors' plans," said CDPQ president and CEO Charles Emond.

Emond added that investors were faced with a number of contradictory signals, such as the direction of inflation, interest rates, employment and the markets, and that this environment encouraged the Caisse to remain prudent, hence the importance of diversifying its portfolio.

HIGH RISK OF RECESSION

Emond pointed out that 2023 will be marked by contradictory signals, "such as the direction of inflation, interest rates, employment and the markets."

Against this backdrop of uncertainty, "vigilance and discipline remain the order of the day."

CDPQ senior vice-president and head of liquid markets Vincent Delisle puts the probability of a US recession over the next year at "over 50 per cent."

He added that the large amount of infrastructure investment in the US, thanks in particular to the Inflation Reduction Act, explains why the US economy is currently resisting higher interest rates.

"I think this may reduce the probability of recession a little compared to historical models," added Delisle, who said he was "more optimistic than the most pessimistic models."

Some models put the risk of a US recession in the next year at 65 per cent.

"If a recession is avoided, we have to ask ourselves what level of growth we will have ahead of us. This question is as important as whether there will be a recession or not," added Emond.

The president and CEO of the CDPQ explained that "even if a recession is slightly avoided, it is highly likely that we will be faced with a much-diminished growth engine."

This report by The Canadian Press was first published in French on Aug. 16, 2023.