The Caisse de dépôt et placement du Québec, manager of Quebec’s public pension funds, says its various funds earned an average rate of return of 14.7% in 2005, beating the previous year’s rate of 12.2%.

Including the 15.2% rate achieved in 2003, the Caisse’s average return for the last three years was 14%.

The Caisse, the country’s largest stock investor and real estate owner, said today the return for 2005 is 270 basis points above the median return for all Canadian fund managers.

As of Dec. 31, 2005 depositors’ net assets totalled $122.2 billion, up $19.7 billion from 2004. This compares with $77.7 billion in 2003 following the hi-tech meltdown.

Of the gain in 2005, $15.2 billion came from investments and $4.5 billion from net deposits.

The $15.2 billion contribution consists of $4.5 billion of net investment income, $7.7 billion of net gains on the sale of investments and $3 billion of unrealized net increases in the value of assets and liabilities on the balance sheet.

In a statement, Henri-Paul Rousseau, president and CEO, noted that the returns of 14% in the last three years since the former banker took over, “are not sustainable over the long term and the financial markets will offer far lower returns in the years to come.”

“For a portfolio such as the Caisse’s, we therefore expect a return of 7% over a 10-year horizon,” he said.

The Caisse manages the pension funds of 20 organizations, including that of civil servants, the workers’ health and safety board, and the provincial pension plan.

Individual returns earned for the Caisse’s main depositors, who each have their own investment policies, ranged from 13.4% to 17.9%.

The best performing sector again in 2005 was real estate, which produced a return of 26.4%.