MONTRÉAL, June 12, 2018 /PRNewswire/ --
- One-year total portfolio net return of 9.8% generated $13.5 billion of net income,
net of all PSP costs.
- Five-year annualized net return of 10.5% which is 1.1% above the Policy Portfolio
- Ten-year net annualized return of 7.1% generated $23.8 billion of cumulative net
investment gains above the return objective of 5.8%.
The Public Sector Pension Investment Board (PSP Investments) announced today that it ended its fiscal year March 31, 2018 with net assets of $153.0 billion, compared to $135.6 billion the previous fiscal year, an increase of 12.9%. The investment manager reported a one-year total portfolio net return of 9.8% on its investments and generated $13.5 billion of net income, net of all PSP costs. This return is significantly greater than the Policy Portfolio benchmark return of 8.7%.
"This is a year we can be proud of," said Neil Cunningham, President and Chief Executive Officer at PSP Investments. "We sustained performance over a year marked by market volatility, which shows clearly that our strategic focus on increased diversification is generating returns. 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."
Net assets increased by $17.4 billion in fiscal year 2018, attributable to net income of $13.5 billion and net contributions of $3.9 billion. All asset classes saw strong returns.
Asset Class Highlights
NET AUM ONE-YEAR FIVE-YEAR % OF TOTAL NET
ASSET CLASS RETURN RETURN ASSETS
Public Markets $ 76.7B 8.3% 10.6% 50.1%
Real Estate $ 23.2B 13.6% 12.7% 15.2%
Private Equity $ 19.4B 12.9% 7.9% 12.7%
Infrastructure $ 15.0B 19.3% 13.8% 9.8%
Natural Resources $ 4.8B 11.2% 13.1% 3.2%
Private Debt $ 8.9B 8.2% n/a 5.8%
Complementary Portfolio $ 2.2B 33.0% n/a 1.4%
As of March 31, 2018:
- Public Markets had net assets under management of $76.7 billion, a decrease of
$0.5 billion from fiscal year 2017, and generated investment income of $6.3 billion,
for a one-year return of 8.3%, compared to a benchmark of 7.7%. Public Markets
continued to generate significant returns in fiscal year 2018, despite increased
geopolitical risk, market volatility and rising interest rates, mainly during the
fourth quarter. At fiscal 2018 year-end, net assets managed in active strategies
totalled $45.8 billion, up from $38.8 billion the previous year, while net assets
managed in internal active strategies totalled $31 billion, up from $24.6 billion.
- Real Estate had $23.2 billion in net assets under management, up by $2.6 billion from
the previous fiscal year, and generated $2.8 billion in investment income, resulting
in a 13.6% one-year return versus 12.3% for the benchmark. Fiscal year 2018 was a year
of stabilization and consolidation, reflecting the maturity of the Real Estate
portfolio. The group achieved strong performance despite an ongoing low-yield
environment. During fiscal year 2018, Pierre Gibeault was appointed Managing Director
and Head of Real Estate Investments.
- Private Equity had net assets under management of $19.4 billion, $3.5 billion more
than in fiscal year 2017, and generated investment income of $2.1 billion, for a
one-year return of 12.9%-versus a 3.4% loss in fiscal year 2017-compared to a
benchmark return of 17.6%. The strong increase in fiscal year 2018 performance was
mainly driven by strong valuation gains, notably in the financial and industrial
sectors, but was partially offset by underperformance of certain investments. However,
investments completed in the last three years, representing $9.9 billion of assets,
have generated returns significantly above benchmark. Private Equity deployed a total
of $4.4 billion (including $2.3 billion in new direct investments and co-investments)
and committed a total of $4.1 billion for future deployment through 17 funds, 11 of
which are with new fund partners. During fiscal year 2018, Mr. Simon Marc was
appointed Managing Director and Head of Private Equity.
- Infrastructure had $15.0 billion in net assets under management, a $3.9 billion
increase from the prior fiscal year, and generated $2.3 billion of investment income,
leading to a 19.3% one-year return, relative to the benchmark return of 12.1%. The
group deployed $3.3 billion in fiscal year 2018, including $2.2 billion in direct
investments. During fiscal year 2018, Mr. Patrick Samson was appointed Managing
Director and Head of Infrastructure Investments.
- Private Debt had net assets under management of $8.9 billion, an increase of $4.5
billion from the prior fiscal year, and generated net investment income of $569
million, resulting in an 8.2% one-year return, compared to a benchmark of 2.3%. The
group deployed net $4.3 billion across over 30 transactions, including investments in
revolving credit facilities, first and second lien term loans, and secured and
unsecured bonds. The group's London team made great strides toward its long-term
portfolio allocation target, with European assets under management accounting for 24%
of the global Private Debt portfolio, up from 8% the prior year.
- Natural Resources had net assets under management of $4.8 billion, an increase of $1.1
billion from the previous fiscal year, and generated record investment income of $450
million, for a one-year return of 11.2%, versus the 3.1% benchmark. The increase in
net assets under management resulted primarily from $864 million in net deployments
and $332 million in valuation gains. Income was driven by strong cash flows and
valuation gains. The group made significant progress again this year in diversifying
its investments into the agriculture sector, which now account for $2 billion of
assets under management. During fiscal year 2018, Mr. Marc Drouin was appointed
Managing Director and Head of Natural Resources.
- Our Board of Directors appointed Neil Cunningham as President and CEO on February
7, 2018. Prior to this appointment, Mr. Cunningham served as PSP's Senior Vice
President, Global Head of Real Estate and Natural Resources at the organization.
- We launched our Inclusion & Diversity (I&D) Forum and initiated an I&D Council
co-chaired by Mr. Cunningham, for whom an active commitment to inclusion and diversity
is a top priority.
- We also received an important accolade by being recognized as one of Montréal's Top
- This year's annual report marks the launch of PSP's new brand, Spot the Edge, which
embodies our passion for exploring every angle, across asset classes, markets and
industries, to broaden our perspectives and hone in on opportunities.
- We continued to integrate environmental, social and governance factors into our
investment decision-making process across asset classes. Significant progress was made
on all pillars of our responsible investment strategy. Our second annual Responsible
Investment Report can be consulted here.
"Our talented, high-performing people and expanded global footprint have allowed us to spot the edge and deliver solid and consistent results," Mr. Cunningham said. "Our vision is to be a leading global institutional investor, a partner of choice to the investment world and an enabler of complex investments. We have the knowledge, talent, systems and flexibility to seize global opportunities as they arise."
For more information on PSP Investments' fiscal year 2018 performance, please visit our dedicated microsite at http://www.investpsp.com [http://annualreport.investpsp.com ] or download the annual report here [http://www.investpsp.com/media/filer_public/documents/PSP-2018-annual-report-en.pdf ].
About PSP Investments The Public Sector Pension Investment Board (PSP Investments) is one of Canada's largest pension investment managers with $153 billion of net assets as of March 31, 2018. It manages a diversified global portfolio composed of investments in public financial markets, private equity, real estate, infrastructure, natural resources and private debt. Established in 1999, PSP Investments manages net contributions to the pension funds 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 and London. For more information, visit investpsp.com [http://www.investpsp.com ] or follow us on Twitter [https://twitter.com/investpsp?lang=en ] and LinkedIn [https://www.linkedin.com/company/psp-investments ].
Media contact: Maria Constantinescu, PSP Investments, Canada: +1-514-218-3795, Toll-free: +1-844-525-3795, firstname.lastname@example.org