The Public Sector Pension Investment Board ended its fiscal year on March 31, 2024, generating a net return of 7.2 per cent, up from 4.4 per cent the previous fiscal year, according to its latest annual report.

The investment organization held $264.9 billion in net assets under management, up 8.7 per cent from the end of its previous fiscal year. It reported $17.8 billion of net portfolio income and $3.5 billion received from net transfers from the federal government. It also reported a 10-year annualized return of 8.3 per cent and a five-year annualized return of 7.9 per cent, exceeding total fund benchmarks of 6.7 per cent and 5.3 per cent, respectively.

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The results can be credited to an overall stronger emphasis in portfolio management by the investment organization, says Eduard van Gelderen, PSP Investments’ chief investment officer. “We have become way more specific in terms of the mandates that we give to the asset classes,” he says. “We asked them, more specifically, what they can add to the total funds but not limiting them in their deal origination.”

The pension fund’s returns were led by public equities (17.5 per cent), infrastructure (14.3 per cent) and credit investments (14.2 per cent), as well as private equity (12.1 per cent), natural resources (4.1 per cent) and fixed income (2.9 per cent). However, its real estate portfolio reported a loss (negative 15.9 per cent).

“We like real estate as a building block in the total fund because it has some very specific characteristics that we need,” he says. “We’re reviewing . . . our strategy now and there will be a shift probably away from office space. I’m not sure whether that certainly will rebound significantly.”

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Despite the struggles in the commercial office sector, he notes the fund’s real estate portfolio did see some relief from other assets, such as in the logistics and manufacturing sectors.

In an investment environment increasingly favouring private assets, private equity (15.3 per cent) is the second-largest asset class at the PSP Investments, behind capital markets (42.2 per cent), with $40.4 billion in net assets under management.

As the federal government encourages Canadian pension funds to increase their domestic investments, van Gelderen refutes the notion that Canadian pension funds overlook the domestic market. Indeed, the fund’s latest report shows its portfolio includes significant exposure to Canadian assets (19 per cent), representing $56 billion.

They’re open for business in Canada, he adds, noting the fund will review any deal that comes its way that is in line with its fiduciary duty. “There is already a significant amount invested in Canada.”

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