The Caisse de depot et placement du Quebec announced Wednesday the largest loss in its history-- $39.8 billion was lost in 2008, representing 25 per cent of its value.
The loss is directly related to investments in asset-backed commercial paper (ABCP). The majority of the loss happened since mid September; the pension fund manager says it was in the positive as of Friday Sept. 13, 2008.
The Caisse admits it made a major mistake in investing as heavily in ABCP as it did. Caisse managers were quoted as saying they thought the ABCP was as safe as T-Bills or bonds, and in hindsight it invested too heavily in the vehicle.
In addition to the bad investment vehicle, it cites the global economic downturn and the quick sinking of the value of the Canadian dollar as factors in the loss.
Politicians speak
At a press conference mid-day Wednesday, Premier Jean Charest said he wants answers as to why the Caisse came up so short.
Opposition parties Parti Quebecois, ADQ and Quebec Solidaire have all said they would like a chance to speak to the Premier and Finance Minister about the decisions that led to the massive losses. There will be hearings held by the National Assembly Finance Committee.
Losses elsewhere
The Caisse is not alone in its losses, although it is at the head of the pack in terms of amounts lost.
In 2008, the following funds were down by:
- Canada Pension Plan: -14.4%
- Ontario Municipal Employees Retirement System: -15.3%
- Alberta Investment Management Corp: -16%
In France there was a 24. 8 per cent loss.
Past triumphs
While many are critical of the Caisse's astonishingly poor performance in 2008, it did see better years:
- 2004: +12.2 per cent
- 2005: +14.6 per cent
- 2006: +14.6 per cent
- 2007: + 5.5 per cent
