- Ten-year net annualized return of 10.7% -- above the return objective of 5.8% -- generated $48.8 billion of cumulative excess net investment gains.
- One-year total portfolio net return of 7.1% generated $11.7 billion of performance income.
- Net assets under management grew by 9.7% to $168.0 billion, up from $153.1 billion in fiscal year 2018.
MONTRÉAL, June 11, 2019 /PRNewswire/ -- The Public Sector Pension Investment Board (PSP Investments) announced today that it ended its fiscal year March 31, 2019, with net assets under management (AUM) of $168.0 billion, compared to $153.1 billion the previous fiscal year, an increase of 9.7%. The investment manager also reported a one-year total portfolio net return of 7.1% and a 10-year net annualized return of 10.7% on its investments and generated $90.1 billion of cumulative 10-year net performance income and $48.8 billion of cumulative net investment gains above the return objective.
"We have great reason to be proud of our strong performance and evolution on the world stage," said Neil Cunningham, President and Chief Executive Officer at PSP Investments. "We saw robust levels of investments throughout fiscal year 2019 and, despite market headwinds, these results clearly show the long-term success of our diversified investment approach in delivering value for our stakeholders."
"Fiscal year 2019 was impacted by higher volatility in public markets amid concerns of a global economic slowdown," added Mr. Cunningham. "Our performance demonstrates the benefits of our strategy to diversify the portfolio across a number of public and private asset classes, to produce a strong positive overall return. Likewise, our strategic partners and platforms across all asset classes continued to generate attractive risk-adjusted investment opportunities, as we all worked together to spot the edge on investments to generate robust long-term returns."
PSP Investments' net assets increased by nearly $15 billion during fiscal year 2019. The increase is attributable to net contributions of $3.7 billion received by PSP Investments and the net return of 7.1% in the current fiscal year.
Asset Class Highlights ASSET CLASS NET ASSETS ONE-YEAR FIVE-YEAR % OF TOTAL UNDER RETURN RETURN NET ASSETS MANAGEMENT(1) --- Public Markets $80.8B 4.6% 8.0% 48.1% --- --- Private Equity $23.5B 16.1% 7.9% 14.0% Private Debt $10.5B 9.2% 14.2%(2) 6.2% --- --- Real Estate $23.5B 7.6% 11.8% 14.0% Infrastructure $16.8B 7.1% 12.7% 10.0% --- --- Natural Resources $ 6.8B 11.1% 12.0% 4.0% Complementary Portfolio $ 1.4B 0.04% 15.6%(3) 0.9% --- --- 1. This table excludes Cash and Cash equivalents. 2. Annualized return since inception (3.3 years). 3. Annualized return since inception (2.2 years).
As of March 31, 2019:
Public Markets, which is composed of Public Markets and Absolute Return Strategies (PMARS) and Fixed Income, finished the year with $80.8 billion of net assets under management, an increase of $4.1 billion from fiscal year 2019. Overall, the group generated a performance income of $3.6 billion, for a one-year return of 4.6%. With an ending AUM of $51.0 billion, slightly down from $51.8 billion in 2018, PMARS faced a volatile and challenging environment for active investment management this fiscal year. Notable contributors to PMARS' performance were the Global Investment Partnerships Portfolio that performed well in these difficult conditions, adding more than $110 million in value and the internally managed long-only strategies which outperformed their respective benchmarks. In the last five years, PMARS generated significant returns, with a five-year annualized return of 9.3%. Fixed Income's assets under management ended the year at $29.8 billion, up from $24.9 billion in 2018, generating a five-year annualized return of 4.8%.
Private Equity had net assets under management of $23.5 billion, $4.1 billion more than in fiscal year 2018, and achieved strong results with a one-year return of 16.1%. Performance income reached $3.2 billion. This is a continuation of the improved performance that began with a new investment strategy implemented during fiscal year 2016. The growth of the portfolio was mainly driven by acquisitions of new direct and co-investments, largely offset with a record year of dispositions, especially in the direct portfolio where we exited investments in Orange Life Insurance and Sky Leasing, as well as Antelliq, which closed after fiscal year-end. New co-investments were made primarily in the industrial, health care, communications and financial sectors with the acquisition of significant interests in Alliant Insurance Services, Azelis and Wittur Group, among others. In 2019, Private Equity signed new fund commitments of $3.5 billion, through 16 new funds.
Private Debt had net assets under management of $10.5 billion, an increase of $1.6 billion from the prior fiscal year, and generated performance income of $837 million, resulting in a 9.2% one-year return. The outperformance was mainly driven by credit selection and fee income. The group deployed net $1.6 billion, reflecting $5.2 billion in acquisitions partially offset by $3.6 billion in dispositions, driven by the higher churn of the maturing portfolio. The group's portfolio is well diversified across geographies, industries, equity sponsors and asset types, heavily weighted toward floating rate exposure and reflects the contribution of the fully ramped-up Private Debt team in London.