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Quebec pension to approach alternatives with ‘greater parsimony’

The Caisse de dépôt et placement du Québec is adjusting its investment strategies in private equity and real estate in response to the global financial crisis.

In the wake of the financial meltdown, Canadian pension fund manager, the Caisse de dépôt et placement du Québec, is taking measures to pull back on its alternatives investments, including private equity and real estate.

Richard Guay, Caisse president and chief executive, said in a statement the market uncertainty had “prompted the Caisse to manage with strategies that emphasise caution, preservation of capital and risk reduction”.

The pension said it had “sufficient liquidities” to follow through on its commitments to depositors and business partners. However, owing to the decline in the stock market lending to increased weighting of its other asset classes, the Caisse said it had decided early last month to subject its alternative assets, including private equity and real estate, to a “new approval process”. New investments in private equity and real estate would also be managed with “greater parsimony”. The pension could not be reached for comment by press time.

According to the pension, Caisse had around 18.7 percent of its assets in real estate, with 11.4 percent in private equity, as of the end of 2007.

“We will come through this crisis as we have come through the other crises that have occurred in the history of the Caisse,” Guay added. The pension’s average annual return for the past five years was 12.4 percent.