PSP Investments

PSP Investments Posts Strong Performance in Fiscal Year 2018 - Net Return of 9.8% Brings Net Assets to $153.0 Billion

Montréal (ots/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 benchmark return.  
- 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. 

Corporate Highlights

- 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 Employers.
- 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. (http://www.investpsp.com/
  media/filer_public/documents/PSP-2018-responsible-investment-report
  -en.pdf) 

"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 or download the annual report here.

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 or follow us on Twitter and LinkedIn.

Media contact: Maria Constantinescu, PSP Investments, Canada: +1-514-218-3795, Toll-free: +1-844-525-3795, media@investpsp.ca

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