Montréal, Canada, June 9, 2022 - The Public Sector Pension Investment Board (PSP Investments) ended its fiscal year on March 31, 2022, with $230.5 billion of net assets under management (AUM) and a 10.9% one-year net portfolio return. Net assets under management grew by nearly $26 billion, up 12.7% from $204.5 billion at the end of the previous fiscal year. Net contributions represented $3.5 billion, while $22.5 billion was generated from net income.
From a long-term investment approach perspective, PSP Investments measures success at the total fund level through the following performance objectives and their related benchmarks:
During fiscal year 2022, PSP investments continued to generate strong net income as the markets recovered, translating into a higher AUM of $230.5B at the end of the fiscal year as compared to $204.5B at the end of fiscal year 2021. PSP Investments’ increase in operating costs was lower than the average AUM growth of 18.0% and was in line with its strategic and operational priorities including talent retention and total fund performance. Due to a combination of sound cost management and the increase in net AUM, PSP Investments’ total cost ratio decreased below our expected average costs and represents the lowest ratio in the last seven fiscal years.
“In the wake of the pandemic, PSP Investments delivered solid, above-benchmark performance,” said Neil Cunningham, President and Chief Executive Officer at PSP Investments. “We did so at the same time as raising our climate ambition by developing our first climate strategy and a bespoke green asset taxonomy. These actions enable us to use our capital and influence to support the transition to global net-zero greenhouse gas emissions by 2050.”
“Our 10-year and five-year performance indicates the long-term value we add through patient capital, portfolio construction and active investment activities,” said Eduard van Gelderen, Senior Vice President and Chief Investment Officer at PSP Investments. “The broad diversification of our portfolio across public and private asset classes, industries, geographies and currencies has been a key factor in helping us reduce risk and improve resilience.”
ASSET CLASS (at March 31, 2022) |
NET ASSETS UNDER MANAGEMENT (billion $)[1] |
ONE-YEAR RETURN |
FIVE-YEAR RETURN |
% OF TOTAL NET ASSETS |
Capital Markets |
$99.9B |
3.0% |
7.4% |
43.4% |
Private Equity |
$35.4B |
27.6% |
17.6% |
15.3% |
Credit Investments |
$21.9B |
7.5% |
7.9% |
9.5% |
Real Estate |
$31.1B |
24.8% |
8.7% |
13.5% |
Infrastructure |
$23.5B |
13.9% |
10.4% |
10.2% |
Natural Resources |
$11.6B |
15.9% |
8.5% |
5.0% |
Complementary Portfolio |
$ 1.4B |
16.9% |
12.0% |
0.6% |
[1] This tables excludes Cash and Cash equivalents. All amounts in Canadian dollars, unless stated otherwise.
As at March 31, 2022:
Capital Markets, comprised of Public Market Equities and Fixed Income, ended the fiscal year with $99.9 billion of net AUM, an increase of $2.4 billion from the end of fiscal year 2021. The group generated portfolio income of $2.9 billion, for a one-year return of 3.0% versus the benchmark return of 1.3%. The five-year annualized return was 7.4%, compared to the 6.6% benchmark return. Public Market Equities, with a year-end AUM of $59.1 billion, a one year-return of 6.0% and a five-year return of 10.1% (versus 3.3% and 8.8% for the respective benchmark returns), was able to outperform as global equity markets were impacted by the emergence of highly contagious COVID-19 variants. The majority of Public Market Equities’ positive relative performance in fiscal year 2022 came from alternative investments, where many investments were well-positioned to take advantage of market dislocations induced by a notable increase in macroeconomic events. Fixed Income ended the fiscal year with a net AUM of $40.7 billion and outperformed its one-year benchmark by 0.2% and its five-year benchmark by o.1%.
Private Equity ended the fiscal year with net AUM of $35.4 billion, up $3.7 billion from the end of the previous fiscal year, and generated portfolio income of $8.6 billion, resulting in a one-year return of 27.6% versus the benchmark return of 19.5%. The five-year annualized return was 17.6% versus a benchmark of 17.2%. The strong performance highlights the strength and quality of the private equity portfolio, both in co-investments and funds. In addition to a favourable valuation environment, portfolio income has been driven by strong earnings growth and cashflows, particularly in the financials and healthcare sectors. The growth of the portfolio was driven by $6.3 billion in valuation gains and $6.4 billion in acquisitions. During the fiscal year, Private Equity deployed $4.4 billion of capital through funds and $2.0 billion in new co-investments which included supporting growth in existing portfolio companies.
Credit Investments ended the fiscal year with net AUM of $21.9 billion, up by $7.4 billion from the end of the previous fiscal year, and generated portfolio income of $1.2 billion, resulting in a 7.5% one-year return that exceeded the benchmark return of -0.5%. The 7.9% five-year annualized return also beat the 2.6% benchmark return. Record levels of acquisition activity by private equity sponsors led to significant opportunities for Credit Investments across the debt capital spectrum.
Real Estate ended the fiscal year with $31.1 billion in net AUM, up by $4.3 billion from the end of the previous fiscal year, and generated $6.4 billion in portfolio income, resulting in a 24.8% one-year return, versus 30.2% for the benchmark return. The 8.7% five-year return exceeded the 8.0% return for the benchmark. Real Estate focused on deploying into high conviction sectors, resulting in key acquisitions within the industrial, residential, life science and studio sectors.
Infrastructure ended the fiscal year with $23.5 billion in net AUM, a $5.1 billion increase from the end of the previous fiscal year and generated $2.7 billion of portfolio income. The one-year return of 13.9% was below the benchmark return of 16.1%. The five-year annualized return of 10.4% exceeded the 6.4% benchmark return. During the fiscal year, Infrastructure deployed $4.8 billion of capital in direct and co-investments and $1.3 billion through the funds. New investments supported energy-friendly transition across Europe and Oceania by acquiring equity participations in utilities and industrials.
Natural Resources ended the fiscal year with net AUM of
$11.6 billion, an increase of $1.9 billion from the end of the previous fiscal year, and generated portfolio income of $1.6 billion, for a one-year return of 15.9%, versus 26.3% for the benchmark return. The 8.5% five-year annualized return beat the benchmark return of 7.6%. The fiscal year was marked by significant valuation gains of $1.3 billion and continued strong deployment of $1.9 billion, mainly in Oceania and the US.
Corporate Highlights
We launched the execution of our new strategic plan, PSP Forward, with the vision to be an insightful global investor and valued partner that is selective across markets and is focused on the long-term. Key accomplishments for fiscal year 2022 include:
Other corporate highlights include:
“I want to thank PSP Investments’ management, employees and Board of Directors for their dedication over the past couple of years; their commitment and resilience have been nothing short of amazing,” said Neil Cunningham, President and Chief Executive Officer of PSP Investments. “Despite all challenges and difficulties posed by the pandemic and global affairs, we remained ever mindful of our responsibility to create a better tomorrow for the 900,000 contributors and beneficiaries on whose behalf we invest. While I will be retiring in March 2023, I have confidence in the passion and abilities of my colleagues to ensure PSP Investments’ future sustainability and performance.”
For more information on PSP Investments’ fiscal year 2022 performance, visit our website and download the annual report. In a break from our previous practice, our Responsible Investment Report will be released in the fall of 2022.
About PSP Investments
The Public Sector Pension Investment Board (PSP Investments) is one of Canada’s largest pension investment managers with $230.5 billion of net assets under management as of March 31, 2022. 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 Twitter and LinkedIn.
Media Contact
Maria Constantinescu
PSP Investments
Phone: (514) 218-3795
Email: media@investpsp.ca