At the end of its 2018 fiscal year, the Public Sector Pension Investment Board posted a net return of 9.8 per cent, representing $13.5 billion in income.
While the result wasn’t as hefty as last year’s 12.8 per cent, the fund beat its benchmark portfolio return of 8.7 per cent. The increase in assets marks a 12.9 per cent jump from the prior fiscal year.
“This is a year we can be proud of,” said Neil Cunningham, president and chief executive officer at PSP Investments, in a press release. “We sustained performance over a year marked by market volatility, which shows clearly that our strategic focus on increased diversification is generating returns.
Read: PSP Investments posts 12.8% return
“Once again, our people highlighted the possible in their active commitment to our shared purpose: to contribute to the financial security of the contributors and beneficiaries who have served Canada throughout their careers.”
PSP Investments saw an 8.3 per cent return from public equities, the largest component of its portfolio at 50.1 per cent. It experienced strong gains for most of the year with increased volatility coming into play largely in the fourth quarter, the release noted.
The fund’s $15 billion of infrastructure investments was also a standout, yielding a 19.3 per cent return, with real estate also posting a particularly strong result of 13.6 per cent. Private equity fared much better than the previous fiscal year when it posted an overall loss of 3.4 per cent. This year, it returned 12.9 per cent, with $19.4 billion under management. The fund attributes the stronger results to valuation gains, primarily in the financial and industrial sectors.
Read: PSP Investments to buy Bombardier’s Downsview property
PSP Investments’ private debt portfolio, which returned 8.2 per cent, more than doubled in the 2018 fiscal year, to $8.9 billion from $4.5 billion. Notably, the fund significantly increased its debt allocation in Europe, which now accounts for 24 per cent of its global private debt portfolio, up from eight per cent the previous year.
Natural resources also saw double-digit returns, yielding 11.2 per cent versus its 3.1 per cent benchmark. In the 2018 fiscal year, the fund increased its allocation to agriculture within that segment, which now accounts for $2 billion in assets.
PSP Investments also made a number of appointments in the last fiscal year, including Pierre Gibeault as managing director and head of real estate investments, Simon Marc as managing director and head of private equity, Patrick Samson as managing director and head of infrastructure investments and Marc Drouin as managing director and head of natural resources.
“Our talented, high-performing people and expanded global footprint have allowed us to spot the edge and deliver solid and consistent results,” said Cunningham. “Our vision is to be a leading global institutional investor, a partner of choice to the investment world and an enabler of complex investments.”
Read: PSP Investments backs global digital payments provider