Quebec’s Caisse Investment Reports 9.3% Return Amidst Global Uncertainty
The Caisse de dépôt et placement du Québec (CDPQ), a major Canadian institutional investor, reported a 9.3% annual return for 2025. While a positive result, it fell short of its benchmark portfolio return of 10.9%. This underperformance is attributed to ongoing geopolitical tensions and persistent tariff uncertainty, particularly related to the United States.
Geopolitical Headwinds and Market Volatility
According to CDPQ CEO Charles Emond, the challenging global landscape significantly impacted investment performance. The web search results indicate a broader trend of geopolitical fragmentation and economic uncertainty in 2025, with tensions in Ukraine, potential shifts in US policy, and China’s strategic positioning all contributing to market volatility. These factors create a complex environment for investors worldwide.
Sector Performance: A Mixed Bag
The Caisse’s 2025 performance revealed a divergence across different asset classes. Equity holdings were a strong driver of returns, achieving a 17.7% increase – the third-best performance in a decade. However, private equity and real estate lagged behind, with returns of 2.3% and 0.2% respectively. Fixed income investments were the only sector to outperform their benchmark, delivering a 6.6% return.
Long-Term Performance Remains Strong
Despite the 2025 underperformance relative to the benchmark, CDPQ’s long-term track record remains solid. The institution boasts a five-year annualized return of 6.5%, exceeding its benchmark of 6.2%. Over a ten-year period, the annualized return stands at 7.2%, compared to a benchmark of 6.9%.
Québec Investments Exceed $100 Billion
CDPQ continues to demonstrate a strong commitment to investing in Québec businesses. In 2025, the institution surpassed the $100 billion mark in cumulative investments within the province, a milestone reached a year ahead of schedule. New investments and commitments in Québec assets totaled $6.3 billion during the year.
Impact of US Trade Policy
The potential for shifts in US trade policy, including the possibility of withdrawing from the Canada-United States-Mexico Agreement (CUSMA), adds another layer of uncertainty. The Caisse acknowledges that the current US administration’s approach is destabilizing and poses risks to the Canadian economy, given that CUSMA protects 85% of trade between the two countries.
Régime de rentes du Québec Performance
The largest fund invested with CDPQ, the Régime de rentes du Québec (RRQ), generated a return of 9.8% in 2025. As of December 31, 2025, the RRQ’s net assets totaled $163 billion, including the supplementary regime.
Navigating a Fragmented World: Investment Strategies for 2026
The challenges faced by CDPQ in 2025 highlight the need for adaptable investment strategies in a world characterized by geopolitical fragmentation and economic uncertainty. Diversification remains a crucial element, as emphasized by CDPQ. Investors must carefully assess risk and seek opportunities across a range of asset classes and geographies.
The Rise of Economic Warfare
The current global landscape is increasingly defined by economic competition and trade disputes. The US-China rivalry is a prime example, with Washington imposing sanctions to curb China’s technological expansion and Beijing responding by strengthening partnerships with Russia and expanding its influence in Africa and Asia. This trend suggests that trade will continue to be used as a strategic tool, creating both risks and opportunities for investors.
The Importance of Fixed Income
In times of heightened uncertainty, fixed income investments can provide stability and downside protection. CDPQ’s outperformance in this sector in 2025 underscores the value of a diversified portfolio that includes fixed income assets.
Frequently Asked Questions
- What is CDPQ? CDPQ is a major institutional investor that manages funds for public and parapublic pension and insurance plans in Québec.
- What caused CDPQ’s underperformance in 2025? Geopolitical tensions and tariff uncertainty, particularly related to the United States, contributed to the underperformance.
- How has CDPQ performed over the long term? CDPQ has a strong long-term track record, with annualized returns exceeding its benchmarks over five and ten-year periods.
- What is the CUSMA? The Canada-United States-Mexico Agreement, which protects 85% of trade between Canada and the US.
Pro Tip: Regularly review your investment portfolio and adjust your asset allocation based on your risk tolerance and the evolving global landscape.
Stay informed about global events and their potential impact on your investments. Consider consulting with a financial advisor to develop a personalized investment strategy.
