Caisse de dépôt et placement du Québec posted a 3.5 per cent return on its portfolio in the first half of this year, earning $5.4-billion in net returns during a time of choppy markets.
"Despite turbulent markets and a global economic downturn, the Caisse generated a positive return in the first half, in line with the long-term needs of its depositors," Michael Sabia, the Caisse's chief executive officer, said in a release.
The Caisse lagged its benchmark index return of 3.7 per cent, but Mr. Sabia pointed out the Caisse had earned a return of 10.5 per cent over the past three years, ahead of the Caisse's benchmark of 8.9 per cent, crediting the institutions "cautious approach in an often highly volatile economic and financial climate."
With the Caisse's subpar performance, it lost its long-standing position as Canada's largest institutional investor to the Canada Pension Plan Investment Board, which had $165.8-billion in assets at the end of June. CPP had widely been expected to surpass the Caisse in portfolio size this year.
The Caisse, which is coming under scrutiny for its involvement of potentially blocking a takeover of Quebec home improvement chain Rona Inc. by U.S.-based Lowe's Cos Inc., said it invested $1.6-billion in Quebec companies in the first half, including $1-billion to help computer services giant CGI Group Inc. buy Logica PLC and $100-million to help engineering concern Genivar Inc. fund a takeover of WSP Group in the U.K.
Its equity portfolio earned a 4.2 per cent return, below its benchmark index of 4.6 per cent.
The Caisse, which manages money on behalf of Quebec pension and insurance funds including the Quebec Pension Plan, ended the half on June 30 with $165.7-billion in net assets under management.
The Caisse separately announced it has shed part of its stake in BAA, the company that owns Heathrow Airport.
The Caisse sold 5.6 per cent of its interest to Qatar Holding LLC for $394-million, reducing its share of the airports operator to 15.6 per cent.
The sale was part of a larger purchase by the Middle Eastern sovereign wealth fund, indirec to purchase a 20-per-cent stake in BAA.
Normand Provost, the Caisse's executive vice-president of private equity, said the Caisse "is taking this opportunity to rebalance and better diversify its infrastructure portfolio while remaining a partner of BAA."