Montreal-based PSP Investments, which manages $230 billion in federal employee pension plan assets, posted a return of 10.9% during its fiscal year ended March 31.
Posted at 4:17 p.m.
This is a net rate of return that exceeds the benchmark for portfolios comparable to those managed by PSP for the pension plans of the Federal Public Service, the Armed Forces, the Royal Mounted Police and the reserve.
During this financial year, the net assets managed by PSP increased by nearly 26 billion, an increase of 12.7% compared to the 204.5 billion recorded a year earlier.
Net contributions from participants in the various pension plans (employers and employees) accounted for $3.5 billion of this gain in assets under management, while $22.5 billion came from net income on investments managed by PSP.
According to Neil Cunningham, President and CEO of PSP Investments, “In the wake of the pandemic, PSP managed to deliver strong, above-average performance while we were developing our first climate strategy, which allows us to to use our capital and influence to support the transition to global carbon neutrality by 2050.”
In the opinion of Eduard van Gelderen, Senior Vice-President and Chief Investment Officer at PSP, “our ten-year (9.8% annualized) and five-year (9% annualized) return indicates the added value of our construction of portfolios and our active investment activities. The broad diversification of our portfolio across public and private asset classes, sectors, geographies and currencies has been instrumental in helping us reduce risk and improve resilience. »
By sector
Among the main assets managed by PSP, the financial markets sector (99.9 billion in listed equities and bonds) produced a return of 3% over one year, ie double the sector benchmark index. Over five years, the annualized return reached 7.4%, compared to 6.6% for the benchmark index.
In the “private equity” sector, the portfolio of 35.4 billion in assets managed by PSP benefited from a return over one year of 27.6% compared to 19.5% for the sector benchmark. Over five years, this annualized return reached 17.6%, just above the benchmark index’s level of 17.2%.
In the “real estate investments” sector, the assets under management by PSP ended the 2022 financial year at 31.1 billion after a return of 24.8% over one year, but much lower than the level of 30% achieved by the sector benchmark. Over five years, however, the 8.7% annualized return of the real estate investments managed by PSP still exceeds the benchmark level of 8%.
Finally, in the “infrastructure investments” sector, PSP ended the year with net assets under management of 23.5 billion, up 5.1 billion over one year. This gain stems from a return of 13.9% over one year, but which remained below the 16.1% return of the sector benchmark.