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Demystifying the economy | A CDPQ fund for everyone?

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Every Saturday, one of our journalists answers, in the company of experts, one of your questions on the economy, finances, markets, etc.

The performance of the Caisse de depot et placement du Québec is often praised. Why does it not offer the public an equivalent mutual fund, the investments of which would reproduce as automatically as possible the current investments of the Caisse? As a small private investor, I would love such a fund! Just a single fund sold without advice on the internet, intended mainly for retirees. It seems so obvious to me that there must be regulatory constraints that prevent it, but are they justified for the common good?

Luke Solomon

The Caisse de depot cannot accept deposits from individuals or private companies. The law only allows it to accept and manage the funds of public bodies that come under the Government of Quebec.

Why not change the law? In order to understand the logic behind the current rules, we asked for help from the former president of the Caisse de depot et placement du Québec Richard Guay, now a full professor of finance at the École des sciences de la UQAM.


PHOTO FRANÇOIS ROY, LA PRESSE ARCHIVES

Richard Guay, former president of the Caisse de depot et placement du Quebec

The CDPQ has low management fees of approximately 0.25% compared to those of mutual funds, which can exceed 2%.

“These low costs are linked in particular to the fact that its depositors have been with the CDPQ for several decades. »

This is the case, for example, of the Régie des rentes du Québec (RRQ) since 1966 and other depositors such as the Government and Public Employees Retirement Plan (RREGOP), the Standards, Equity , occupational health and safety (CNESST) and the Société de l’assurance automobile du Québec (SAAQ).

These long-term depositors, who have huge sums and for a long time [peut-être pour toujours], greatly reduce costs and follow-ups at the CDPQ. Impossible, at the CDPQ, to maintain these low costs with thousands, even millions of small accounts and their follow-ups.

Richard Guay, former president of the Caisse de depot et placement du Quebec

The CDPQ takes advantage of its long-term horizon which allows it to commit billions over several years, says the former president, a model difficult to maintain with small depositors.

Different goals

Small investors do not all have the same behavior. Some may need to deposit and withdraw funds frequently, others react emotionally to a major stock market decline, such as in March 2020.

Significant investments should also be made in the CDPQ’s computer system to modify it so that it can monitor a large number of small accounts.

“If the CDPQ accepted deposits from individuals, it would risk being even more subject to criticism when the decisions or the results are disappointing,” adds Richard Guay. As you know, the CDPQ rather seeks a low profile to limit criticism and stakes. »

“As a small investor, there is always your QPP [une portion de vos économies pour la retraite] which is managed by the CDPQ, as well as your income insurance included in your driver’s license [SAAQ] and your work accident insurance [CNESST]. »

Moreover, these institutions do not have the right to have their assets managed by private management companies. According to Richard Guay, if the CDPQ considered modifying its law to accept small investors, private management companies would undoubtedly exert pressure to avoid this asymmetrical competition.

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