CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC AR 2014 OUR CLIENTS, THE DEPOSITORS

Transcription

1 23 OUR CLIENTS, THE DEPOSITORS

2 24 Our Clients, the Depositors The strategic planning exercise carried out in 2014 to set priorities for involved an in-depth examination of the investment strategies and portfolios offered to depositors. This reflection was based on la Caisse s main orientations and focused on the best ways to provide depositors with the long-term returns they need, in line with their risk tolerance. CLOSE COLLABORATION La Caisse s depositors have been central to its actions since 2009, when it adopted a collaborative model based on listening, transparency and clearly defined roles and responsibilities. This model has given rise to such initiatives as the creation of an investment-policy expertise group and consultation forums enabling Caisse teams and depositor representatives to pursue in-depth discussions. With the growing complexity of the markets and the rapid changes taking place in its business environment today, la Caisse intends to further enhance its client interaction. By ensuring it has the agility required to make timely investment decisions, la Caisse will strive to offer advisory services and investment vehicles tailored ever more effectively to the nature and needs of each depositor. CHANGES IN THE PORTFOLIO OFFERING The analysis of the current investment environment that was carried out during the year highlights underlying trends that la Caisse and its depositors need to address, such as: considerable divergence in the growth rates of various economies and in market trends; increasingly globalized companies; more intense competition between large investors in several investment sectors, especially for less-liquid assets; generally lower expectations of long-term returns, particularly from fixed-income securities; and an increased disparity in the outlook for various growth markets. La Caisse considered these trends when it was establishing its priorities. Announced in 2014, changes to the investment strategies of the following portfolios are aligned with the implementation of these priorities.

3 25 Canadian Equity the 01 ring m 2011 to at record lows 05 ventional 06 Launched in 2013 with the creation of the Global Quality Equity portfolio, the absolute-return management approach for equity markets was extended to the Canadian Equity portfolio in Securities are now selected on the basis of well-defined quality criteria and appropriate absolute risk, while the benchmark index is used afterwards only to measure the portfolio s performance. The portfolio s investment policy was adjusted accordingly, most notably to establish an absolute return target, an absolute risk limit and concentration limits by issuer and by sector. Bonds The prevailing bond market environment indicates that absolute returns will be lower than those of recent years. Thus, to continue offering depositors a portfolio with an attractive risk-return profile, la Caisse proposed to diversify its sources of value added, notably: by focusing more on corporate securities and on strategies based on yield spreads between government securities; and prices of 07 DEPOSITORS tween the growth economies 08 INDIVIDUAL RETURNS relation to benchmark 09 Asset allocation decisions, particularly in the Fixed Income, the overall portfolio 11 Inflation-Sensitive Investments hmark portfolio and 12 Equity asset classes, dex returns 13 have a major impact on each al estate 14 depositor s returns. These choices estate 15 are based on such considerations as their target returns, risk frastructure 16 tolerance and investment horizon. tructure 17 Over four years, the annualized rivate equity returns 18 on the eight main ce 19 depositors funds ranged rns 20 from 8.9% to 10.2%. In 2014, the returns on these funds ranged from 11.0% to 12.5%. lity equity 22 FIGURE 1 by increasing the portfolio s weighting of securities issued by foreign companies and government securities of growth countries. Infrastructure In a highly competitive market environment, the strategy used for the Infrastructure portfolio continued to evolve. While continuing to emphasize transactions negotiated directly with strategic partners, it focuses on the following areas: grouping the portfolio s activities into two management mandates: Quality and Value Added; and further business development and capital deployment in the United States, Canada and Australia, as well as execution of the strategy for growth markets Outlook La Caisse will continue to enhance its portfolio offering in Further to the discussions that began at the end of 2014, its meetings with depositors will focus on ways to optimize the risk-return profiles of the equity portfolios. differences in returns On the eight main depositors funds Weighted average return on depositors funds Highest return Lowest return 9.6% 4 years 1.3% difference 12.0% % difference 25 bec 26 ts 27

4 26 Our Clients, the Depositors PORTFOLIOS OFFERED TO DEPOSITORS La Caisse enables its depositors to allocate their funds to specialized portfolios that hold securities from the same asset class (see Table 2). Most of these portfolios, representing more than 85% of net assets, are managed actively. Each portfolio is managed according to a set of rules provided in an investment policy. This document specifies: the management approach used in the portfolio; its investment universe and benchmark index; its target returns; and its risk oversight. In addition to its specialized portfolios, la Caisse offers customized overlay strategies so that each depositor can tailor its exposure to foreign currencies and interest rates. CUSTOMIZED ADVISORY SERVICES La Caisse offers advisory services to assist its depositors with their investment decisions. The services include: analyses of financial markets and economic outlook; risk and return forecasts for the main asset classes and specialized portfolios; and simulated allocation of depositors assets to various specialized portfolios in order to determine the optimal composition of their benchmark portfolios, in line with their needs and risk tolerance. In recent years, la Caisse has improved the advisory services it offers by enhancing its ability to analyze its clients long-term financial commitments. Several projects to analyze assets and liabilities were carried out in 2014 in collaboration with some of the depositors. These analyses check the relevance of existing and proposed asset allocations in terms of potential impacts on the level of capitalization and the contributions required over the long term by the plan in question. TABLE 2 SPECIALIZED PORTFOLIO OFFERING (as at December 31, 2014) ACTIVELY MANAGED INDEXED OBJECTIVES FIXED INCOME Bonds Real Estate Debt Short Term Investments Long Term Bonds Reduce the portfolio s overall risk level Match depositors assets and liabilities INFLATION- SENSITIVE INVESTMENTS EQUITIES OTHER INVESTMENTS Real Estate Infrastructure Global Quality Equity Canadian Equity Emerging Markets Equity Private Equity Active Overlay Strategies Asset Allocation ABTN Real Return Bonds U.S. Equity EAFE Equity Have exposure to markets for which investment income is indexed to inflation Partially hedge the inflation risk associated with the liabilities of several depositors Increase depositors long-term target returns Achieve diversification and complementarity of la Caisse s overall portfolio 02_Specialized portfolio offering _V1 /04/2015

5 27 THE EIGHT MAIN DEPOSITORS FUNDS Representing 97.3% of net assets as at December 31, GOVERNMENT AND PUBLIC EMPLOYEES RETIREMENT PLAN 2 RETIREMENT PLANS SINKING FUND 55.7 B 53.4 B > 540,000 contributors > 220,000 retirees and 15,000 surviving spouses and orphans > 4.5 billion in retirement benefits paid annually > Fund used by the Government of Québec to capitalize the employer s portion of retirement benefits of employees in the public and parapublic sectors 3 RÉGIE DES RENTES DU QUÉBEC 4 SUPPLEMENTAL PENSION PLAN FOR EMPLOYEES OF THE QUÉBEC CONSTRUCTION INDUSTRY 51.9 B > 4 million contributors > 1.8 million beneficiaries > 12 billion in benefits paid annually 18.0 B > 170,000 contributors > 86,000 retirees or surviving spouses > 700 million in benefits paid annually 5 COMMISSION DE LA SANTÉ ET DE LA SÉCURITÉ DU TRAVAIL 6 SOCIÉTÉ DE L ASSURANCE AUTOMOBILE DU QUÉBEC 13.7 B 10.0 B > 230,000 contributing employers > 3.8 million workers covered > 1.9 billion in benefits paid annually > 5.2 million driver s licence holders > 6.2 million registered vehicles > 1 billion paid in compensation annually 7 PENSION PLAN OF MANAGEMENT PERSONNEL 8 GENERATIONS FUND 9.6 B 7.5 B > 29,000 contributors > 25,500 retirees and 2,000 surviving spouses and orphans > 1 billion in benefits paid annually > Fund used to repay Québec s debt

6 TABLE 3 28 LA CAISSE S 32 DEPOSITORS Comparison of net assets as at December 31, 2013, and as at December 31, 2014 (fair value as at December 31 in millions of dollars) Depositors net assets First deposit % % PENSION PLANS Régie des rentes du Québec , , Supplemental Pension Plan for Employees of the Québec Construction Industry , , Government and Public Employees Retirement Plan , , Pension Plan of Management Personnel , , Individual Plans Pension Plan of Elected Municipal Officers Régime complémentaire de rentes des techniciens ambulanciers/ paramédics et des services préhospitaliers d urgence Ministère des Finances, Government of Québec 1 Retirement Plans Sinking Fund , , Superannuation Plan for the Members of the Sûreté du Québec employers fund Régime de retraite de l Université du Québec Régime de retraite du personnel des CPE et des garderies privées conventionnées du Québec Régime de retraite pour certains employés de la Commission scolaire de la Capitale Pension Plan of the Non-Teaching Staff of the Commission des écoles catholiques de Montréal Superannuation Plan for the Members of the Sûreté du Québec participants fund Régime de retraite des employés de la Ville de Laval Retirement Plan for Active Members of the Centre hospitalier Côte-des-Neiges Fonds commun de placement des régimes de retraite de l Université Laval Fiducie globale Ville de Magog Régime de retraite des employées et employés de la Ville de Sherbrooke Régime de retraite des agents de la paix en services correctionnels Régime complémentaire de retraite des employés réguliers de la Société de transport de Sherbrooke Régime de retraite de la Corporation de l École Polytechnique _La caisse s 32 depositors _V _Tableaux RA AN V5 13/04/2015 INSURANCE PLANS Régie des marchés agricoles et alimentaires du Québec La Financière agricole du Québec Autorité des marchés financiers Commission de la santé et de la sécurité du travail , , Société de l'assurance automobile du Québec , , Fédération des producteurs de bovins du Québec Survivor s Pension Plan Conseil de gestion de l'assurance parentale OTHER DEPOSITORS Office de la protection du consommateur Société des alcools du Québec Ministère des Finances, Government of Québec 1 Generations Fund , , Accumulated Sick Leave Fund Territorial Information Fund Agence du revenu du Québec Total 225, , The Ministère des Finances entrusts la Caisse with a total of five funds. 03