1708849301 Nothing too fancy The Caisse uses AI to manage nearly

Nothing “too fancy”: The Caisse uses AI to manage nearly $20 billion in assets

The Caisse de dépôt etplacement du Québec did not wait for ChatGPT to introduce artificial intelligence (AI) within its walls. Today, this technology, which inspires both hope and fear, plays a crucial role in managing nearly $20 billion in assets.

• Also read: Return of 7.2% for the Caisse de dépôt in 2023

• Also read: The Caisse is preparing extensive layoffs

“External advisors told us that we were actually among the four or five most progressive institutional managers in terms of certain things we do,” Caisse CEO Charles Emond said in an interview with the Journal.

“It’s promising,” he adds. As for the stock market, today it is something that has reached $18-19 billion. [sur un portefeuille de 114 milliards $]. So it’s not nothing, but it’s still moderate.”

“Healthy tension”

We suspected it: The Caisse does not use common tools like ChatGPT, but rather internally developed solutions.

“We built it brick by brick,” Mr. Emond explains. We had help [externe]. I’m really proud of that because it creates a healthy tension and makes us always think introspectively about how we do things.”

The head of the fund assures that the institute is not doing anything “excessive” and that all the necessary safety precautions have been taken to avoid any slip-ups.

“Quebecers shouldn’t think that they are robo-advisors managing their nest egg,” he says. On the other hand, the machine can help people concentrate in the right place.”

Caisse de dépôt etplacement du Québec

Archive photo, Martin Alarie

Fish further into the lake

AI “can filter more titles [boursiers] as a human being, illustrates Charles Emond. She can go fishing elsewhere in the lake. That would be humanly impossible for a manager.”

In combination with “data science”, AI is able to prevent costly errors by the Caisse, the manager claims.

“Generally in a portfolio, if they go really low, it's one or two torpedoes that will wipe out the performance of 25 stocks,” he says. [L’IA] identifies them very well.”

Mr Emond does not believe the growing importance of AI will lead to job losses at the Caisse.

“The machine applies our managers’ recipe, but without emotion. And there's the feedback it gives our managers on their own sales. It improves the way they do business. To me, it's something virtuous rather than something that destroys a practice where we would tell people, 'We don't need you anymore.' We're just bringing our people into the 'value-added' part of the decision-making process.”

Charles Emond about…

His ambitions for his second term in office

“I am always in the spirit of continuous improvement. We will continue to modernize the fund. The integration of our subsidiaries [immobilières], it brings a lot of advantages. We will reach a new level in terms of potential. So it's about continuing what we've done but remaining ambitious and pragmatic. We will have no choice if we want to create value. It’s really about optimizing everything we do, and that may be the next chapter of my term.”

A stake in Hydro-Québec's $185 billion projects

Caisse de dépôt etplacement du Québec

Michael Sabia, CEO of Hydro-Québec Photo Pierre-Paul Poulin

“When we look at investment opportunities, we first look at who the partner is. Hydro-Québec is our home, we know them. Are these areas in which we perform well? Yes, infrastructure. Finally, what is the project? If it’s about decarbonizing Quebec, we’re certainly interested in that.”

The decline in private investment returns

Caisse de dépôt etplacement du Québec

The Caisse's investment in Alstom declined in 2023. “Photo AFP”

“It is an asset class that has delivered some of the most attractive returns over five and 10 year periods. We are at the right level – we have 18% [du portefeuille total de la Caisse]. Many of our colleagues have much more, so I'm happy to be where we are. I'm not worried. This is not a portfolio that has collapsed. He shot up like a rocket and then slowed down a bit. It's just healthy. It’s more of a fracture than a chronic problem.”

An exit from Heathrow Airport

Caisse de dépôt etplacement du Québec

Photo from Heathrow Airport X account

“It is an asset that has always sparked great interest and pride. In the group we belong to, there are shareholders who are planning to monetize [leur participation]. We have the right to join in if they ever sell. I cannot make any further comment. It is an asset that we have had for 17 years. We’ll see what happens next.”

The University City project in Montreal

Caisse de dépôt etplacement du Québec

“Photo from the Cité universitaire de Montréal website”

“It is a great project because it meets several criteria. It structures for Quebec and downtown Montreal. It helps in the context of the real estate crisis. And student housing is a resilient asset that allows us to provide advantageous returns to our depositors like the REM. In short, we should not always believe this when the government calls us for a project […] They force it on us [et] We say to ourselves, “Ah, damn, we have to do this.” If we can help at home and it fits into our strategy, the question becomes: What don’t we like about it?”

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