The Public Sector Pension Investment Board is reporting a net return of 18.4 per cent in fiscal 2021.
As of March 31, 2021, the PSP had $204.5 billion in net assets under management, up 20.4 per cent from $169.8 billion at the end of the previous fiscal year. The PSP also reported a 10-year annualized return of 8.9 per cent and a five-year annualized return of 9.3 per cent, exceeding total fund benchmarks by 1.1 per cent and one per cent, respectively.
Private equity generated $7.2 billion, resulting in a one-year return of 28.4 per cent and a five-year annualized return of 11.3 per cent, underperforming benchmarks of 31.7 per cent and 15.1 per cent, respectively.
In a press release, the PSP attributed these results primarily to the underperformance of certain legacy investments in the communications, consumer staples and industrials sectors. However, it also noted that the most recent portion of the private equity portfolio — invested over the past six years following a change in asset class strategy and representing more than 85 per cent of assets under management within the asset class — generated a five-year return in excess of the benchmark, primarily attributable to direct and co-investments in the health-care, consumer discretionary, technology and financial sectors.
The PSP’s other asset classes all reported growth exceeding one-year benchmarks, including capital markets — comprised of public equities and fixed income — at 26.6 per cent versus 23 per cent, credit investments (10.5 per cent versus 9.6 per cent), infrastructure (4.5 per cent versus 3.5 per cent), natural resources (10.6 per cent versus 7.7 per cent) and real estate (3.8 per cent versus negative six per cent).
“Our fiscal year began and ended in the midst of an active global pandemic, with all employees working from home,” said Neil Cunningham, president and chief executive officer at the PSP, in the release. “I’m exceptionally proud of our resilient and talented team that delivered [the PSP’s] strongest absolute return in over 10 years through exceptionally turbulent times. . . . This investment performance demonstrates the strength of our portfolio and the inspired strategic actions taken to protect and enhance the long-term value of our holdings and to create high-quality, long-term returns for our contributors and beneficiaries.”