- Net assets under management as of March
31, 2024 increase to $264.9
billion.
- Fiscal year ends at March 31,
2024 with one-year return of 7.2%.
- Ten-year net annualized return of 8.3% leads to $24.5 billion in cumulative net investment gains
above Reference Portfolio, indicative of long-term added value
through strategic asset allocation and active management
decisions.
MONTRÉAL, June 17, 2024
/PRNewswire/ -- The Public Sector Pension Investment Board (PSP
Investments) ended its fiscal year on March
31, 2024, with a 7.2% one-year net portfolio return and with
strong performances delivered by the Public Market Equities,
Infrastructure, and Credit Investments portfolios. This performance
continues PSP Investments' track record of delivering strong
long-term returns through a total fund approach to portfolio
construction and through the benefits of active management.
Net assets under management grew to $264.9 billion, up 8.7% from $243.7 billion at the end of the previous fiscal
year. Net transfers received from the federal government
represented $3.5 billion and
$17.8 billion of net income was
generated.
PSP Investments takes a long-term investment approach that
considers pension funding risk and measures success at the total
fund level through the following performance objectives:
- Achieve a return, net of expenses, greater than the return
of the Reference Portfolio over a 10-year period: By the end of
fiscal year 2024, PSP Investments achieved a 10-year net annualized
return of 8.3%, which represents $24.5
billion in cumulative net investment gains above the
Reference Portfolio and an outperformance of 1.1% per annum.
- Achieve a return, net of expenses, exceeding the Total Fund
Benchmark return over 10-year and 5-year periods: By the end of
fiscal year 2024, PSP Investments achieved a 10-year net annualized
return of 8.3% against the Total Fund Benchmark return of 6.7%, and
a five-year net annualized return of 7.9% against the Total Fund
Benchmark return of 5.3%. This represents $31.5 billion in excess net investment gains over
10 years and $27.2 billion in excess
net investment gains over five years.
Focusing on our strengths with coordinated
excellence
"As we look to the future, we will continue to
focus on our strengths to deliver strong long-term performance and
a resilient portfolio in the face of external forces that will
impact our investment environment," said Deborah K. Orida,
President and CEO at PSP Investments. "We are an active global
investment organization with proven capabilities to invest across
major asset classes on a global scale for the long-term."
"We recorded positive returns against a backdrop of the
volatility of the last few years dominated by geopolitical
uncertainty, inflation and rising interest rates," said
Eduard van Gelderen, Senior Vice
President and Chief Investment Officer at PSP Investments. "As
investors, we strive to build a robust portfolio, capable of
withstanding market volatility and navigate a wide range of
outcomes so we can consistently meet our mandate. PSP Investments'
performance showcases the strength and resilience of our portfolio
and the caliber of talent of our people."
"PSP Investments is honoured to manage the amounts transferred
to us by the government of Canada
to help support the pension funds of approximately 900,000
beneficiaries and contributors who have protected and served
Canada," added Ms. Orida. "As we
pursue our mission and mandate, we are also proud to contribute to
the Canadian economy through investments in companies that are
creating quality jobs for Canadians, supporting communities,
advancing the transition to a low-carbon future, and investing in
innovation. Our $56 billion exposure
to Canadian assets includes significant investments in public
equities, real estate, natural resources, and infrastructure."
According to a report released by data platform Global SWF, PSP
Investments ranked among the world's top 10 public pension funds
and sovereign wealth funds that generated the largest compound
annualized returns between 2013 and 2022. The report found PSP
Investments had the second largest 10-year annualized rate of
return of the Canadian plans who made the list and the
sixth-largest 10-year annualized rate of return in comparison to
the public pension funds and sovereign wealth funds listed in the
report.
In fiscal year 2024, PSP Investments delivered on its strategic
and operational priorities, effectively enhancing its investment
capabilities in an increasingly complex investment environment. The
organization continued its cost discipline and strengthened its
talent pool to remain competitive in global markets. This approach
led to an operating cost ratio of 29.5 bps, which is indicative of
PSP Investments' continued commitment to diligent cost
management.
Investment highlights
ASSET
CLASS (at March 31,
2024)
|
NET ASSETS UNDER
MANAGEMENT1
|
ONE-YEAR
RETURN
|
FIVE-YEAR
RETURN
|
TEN-YEAR
RETURN
|
Public Markets
Equities
|
$55.6B
|
17.5 %
|
10.3 %
|
9.8 %
|
Fixed Income
|
$56.2B
|
2.9 %
|
2.0 %
|
3.4 %
|
Private
Equity
|
$40.4B
|
12.1 %
|
14.8 %
|
11.0 %
|
Credit
Investments
|
$26.2B
|
14.2 %
|
9.8 %
|
11.6%2
|
Real Estate
|
$27.2B
|
(15.9) %
|
0.9 %
|
6.1 %
|
Infrastructure
|
$34.5B
|
14.3 %
|
12.0 %
|
12.2 %
|
Natural
Resources
|
$15.2B
|
4.1 %
|
7.0 %
|
9.7 %
|
Complementary
Portfolio
|
$2.4B
|
20.6 %
|
9.8 %
|
11.5%3
|
_________________________________
|
1
This table excludes Cash and Cash equivalents. All amounts in
Canadian dollars, unless stated otherwise.
|
2
Actualized return since inception (8.3 years).
|
3
Actualized return since inception (7.2 years).
|
At March
31, 20244:
Capital Markets, comprised of Public Market Equities and
Fixed Income, ended the fiscal year with $111.8 billion of net AUM, an increase of
$13.3 billion from the end of fiscal
year 2023. Public Market Equities, which uses a combination
of active and passive strategies as well as alternative
investments, ended the fiscal year with a net AUM of $55.6 billion. The five-year annualized absolute
return of 10.3% outperformed the benchmark of 8.8%. Over this
period, both actively managed public equity investments and
alternative investments contributed positively. Fixed
Income, managed using a combination of Global Sovereign
Interest Rates and Emerging Market Debt, ended the fiscal year with
a net AUM of $56.2 billion, an
increase of $11.2 billion from the
end of fiscal year 2023. Its annualized five-year return of 2.0%
outperformed the five-year benchmark of 1.6% due to its strategic
management and long-term investment horizon.
Private Equity ended the fiscal year with a net AUM
of $40.4 billion and generated
portfolio income of $4.5 billion. The
five-year annualized return of 14.8% outperformed the benchmark
return of 12.1%, showcasing the benefits of well-established
partnerships with leading fund managers and the quality of the
co-investment portfolio. Private Equity investments in the
financials and healthcare sectors strongly contributed to the
value-add. The asset class generated over $4.5 billion in cash distributions in fiscal year
2024 for a cumulative total of $32.5
billion over the last five years.
Credit Investments ended the fiscal year with a net
AUM of $26.2 billion and generated
portfolio income of $3.5 billion. The
9.8% five-year annualized return outperformed the 4.9% benchmark
return due to strong credit selection, higher interest spreads
versus the benchmark, and fee income. Credit Investments has strong
differentiated capabilities due to team expertise in technology,
industrials, and healthcare. All three sectors have generated
significant outperformance compared to the relevant sector
benchmarks. In the fiscal year, the asset class realized
$6.2 billion of divestitures, mainly
due to higher levels of borrower repricing activity linked to a
resurgence of the syndicated loan market.
Real Estate ended the fiscal year with a net AUM of
$27.2 billion and generated a
portfolio loss of $(5.1) billion. The
five-year annualized return of 0.9% outperformed the 0.7% benchmark
return, despite this fiscal year's negative return. The negative
revaluation of the portfolio over the last two years was mostly
driven by higher interest rates and structural changes. The
traditional office sector, particularly in North America, continues to be significantly
impacted by a deterioration in occupancy and rents, reflecting
uncertainty around the hybrid working model and amplified by the
scarcity of available financing. The performance of the impacted
sectors was partially mitigated by the global logistics and
alternative residential sectors such as student housing.
Pursuant to the revision of the group's investment strategy,
Real Estate continues to prune the portfolio, optimize partner
relationships and transact in key sectors and select markets
worldwide.
Infrastructure ended the fiscal year with a net AUM of
$34.5 billion and generated portfolio
income of $4.3 billion. The five-year
annualized return of 12.0% significantly outperformed the 4.5%
benchmark return. The portfolio outperformance was primarily driven
by strong operating performance, high inflation linkage and
downside protection. The portfolio also benefited from the
value-add of its platforms, which provide strategic and competitive
advantages. Investments in the data center and transportation
subsectors, have significantly outperformed, supported by strong
fundamentals and favourable market conditions. In fiscal year 2024,
the asset class invested $4.0 billion
of capital including new investments in Canada that support the energy transition.
Natural Resources ended the fiscal year with a net
AUM of $15.2 billion and generated
portfolio income of $0.6 billion. The
five-year annualized return of 7.0% outperformed the (1.8)%
benchmark return. The positive results reflect PSP's long-term
investment horizon and strong operating performance with
like-minded, best-in-class, local operating partners. The portfolio
also benefited from significant downside protection and inflation
linkage. This allowed the portfolio to remain resilient in a rising
rates environment that negatively impacted its benchmark.
___________________________________
|
4 In
alignment with PSP Investments' corporate policy not to hedge
foreign currency exposure, the benchmarks for Private Equity,
Credit Investments, Real Estate, Infrastructure and Natural
Resources are set such that they remain neutral to currency
movements, meaning that the actual currency return impact on these
asset classes is reflected in the benchmark.
|
Canada Growth Fund
In spring 2023, PSP Investments was announced by the Government
of Canada as the investment
manager for the Canada Growth Fund (CGF), a $15 billion investment vehicle established to
support the growth of Canada's
clean economy. We are honoured to have been appointed to this role,
in recognition of our investment expertise and track record, mature
and scalable operational ecosystem, and governance framework that
is independent and at arm's length from the government. CGF is
managed separately and independently from PSP Investments' pension
investment mandate.
Since then, Canada Growth Fund Investment Management Inc., has
rapidly ramped up investment management activities, leading to
multiple investment announcements in fiscal year 2024. For more
information about the activities of CGF, visit
https://www.cgf-fcc.ca/ or consult CGF's first annual report.
Corporate highlights
Our mission, mandate, and strong sense of duty inform our
decisions, underpin our success, and shape our strategies and
culture. In addition to delivering solid performance and being well
positioned for continued growth, PSP Investments continued to make
important progress on strategic priorities.
Key accomplishments for the fiscal year 2024:
- We developed a three-year strategic plan that leverages PSP
Investments' unique strengths as we aim to enhance our capabilities
to deliver superior risk-adjusted returns, manage funding risk and
execute with coordinated excellence to maintain a high level of
stakeholder trust.
- We further enhanced our climate investing capabilities across
asset classes, portfolio construction and enhanced data collection.
By integrating material climate change considerations into our
investment process, we aim to mitigate risks and capitalize on
value creation opportunities in the transition to a low-carbon
economy. More details about PSP Investments' progress on
sustainability and climate innovation will become available later
this fall as part of our upcoming 2024 sustainability report.
- We reinforced the importance of our mission and refreshed our
core values, emphasizing how they guide our actions and decisions,
ensuring that we foster a culture where we can excel, individually
and collectively, and tap into our diverse experiences to improve
performance.
- Effective April 1, 2024, Mr.
Patrick Charbonneau, President and
Chief Executive Officer, Canada Growth Fund Investment Management,
joined PSP Investments' senior management team.
For more information on PSP Investments' fiscal year 2024
performance, download the annual report here.
About PSP Investments
The Public Sector Pension
Investment Board (PSP Investments) is one of Canada's largest pension investors with
$264.9 billion of net assets under
management as of March 31, 2024. It
manages a diversified global portfolio composed of investments in
capital markets, private equity, real estate, infrastructure,
natural resources, and credit investments. Established in 1999, PSP
Investments manages and invests amounts transferred to it by the
Government of Canada for the
pension plans of the federal Public Service, the Canadian Forces,
the Royal Canadian Mounted Police and the Reserve Force.
Headquartered in Ottawa, PSP Investments has its principal business
office in Montréal and offices in New
York, London and
Hong Kong. For more information,
visit investpsp.com or follow us on LinkedIn.
Media Contact : Maria
Constantinescu, PSP Investments, Phone: (514) 218-3795,
Email: media@investpsp.ca
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