Public Sector Pension Investment Board earned 6.5% last year, bought Canadian stocks as inflation hedge
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- PSP Investments earned 6.5% in its fiscal year ended March 31, falling short of its 13.1% internal benchmark and the federal government's 11.7% reference portfolio, while managing $320.6 billion in net assets
- Canadian equities allocation rose by two percentage points within PSP's $92.8-billion stock portfolio, which gained 20.6% — a deliberate inflation hedge as pension payments to retirees rise with consumer prices
- Real estate was the biggest drag, with a $2.1-billion loss as assets fell 7.3%; CEO Deborah Orida said PSP is shifting from an 'opportunistic approach to a more disciplined, focused strategy' and is 'starting to see opportunities' to sell assets
- Private credit earned just 3.1%, with PSP citing lower loan valuations amid concerns about lenders' exposure to technologies vulnerable to AI disruption, particularly a cohort of aggressive 2021–2022 loans being digested across the industry
- Private equity gained 5.3%, but PSP reaped $8.6 billion in cash distributions by selling and refinancing assets; the fund is now at its target allocation, meaning it is 'not a forced seller'
- U.S. dollar exposure was reduced; currency fluctuations cut overall investment gains by 2.2% versus a 5.8% tailwind the prior year, and Orida said the dollar's safe-haven status 'has been impacted' by recent global events
- PSP's 10-year average annual return is 8.8%, beating benchmark returns of 8.4% and 8.2%; the fund invested $10 billion in Canada during the fiscal year and Orida said she is 'excited' about Ottawa's pro-active approach to attracting investment
Why it matters: PSP's $320.6 billion in net assets backs pensions for the federal public service, Canadian Armed Forces, and RCMP — meaning the 6.5% return still exceeds the actuarial rate needed to meet long-term obligations despite the benchmark miss. The $2.1-billion real estate loss and AI-disruption concerns in private credit are pushing the fund to reposition toward inflation-linked assets.
Ask SkimNews
