PSP Investments Posts 8.5% 10-year Annualized Rate of Return for Fiscal Year 2020

Focus on long-term horizon and diversification safeguards pensions of contributors and beneficiaries who dedicate their professional lives to public service.




  • Ten-year net annualized return of 8.5%—above the return objective of 5.7%—generated $32.9 billion of cumulative excess net investment gains.
  • Over the last 10 years, PSP Investments’ performance exceeded the performance of the Reference Portfolio by 1.3% per year without incurring more pension funding risk.
  • Five-year net annualized return of 5.8% exceeded the policy portfolio benchmark of 5.1%.


Montréal, Canada (July 9, 2020) - The Public Sector Pension Investment Board (PSP Investments) ended its fiscal year March 31, 2020, with a five-year net annualized return of 5.8% and a 10-year net annualized return of 8.5% on its investments. During the same period, PSP Investments generated $32.9 billion of cumulative net investment gains above the return objective over the past 10 years.


The one-year total portfolio net return was -0.6%, reflecting severe market declines due to the global COVID-19 pandemic in the weeks preceding the March 31, 2020 year-end. Nonetheless, this result exceeded the reference portfolio’s[1] one-year return of -2.2%.


The pension investment manager reported $169.8 billion in net assets under management, compared to $168.0 billion the previous fiscal year, an increase of 1.1%.


“I want to thank the PSP Investments team for their work safeguarding the investments made on behalf of the public sector pension plans, many of whose members are among the frontline heroes actively supporting Canadians during the COVID-19 pandemic,” said Neil Cunningham, President and Chief Executive Officer at PSP Investments.  


“Despite the decline in equity markets before the year-end, we were able to exceed the reference portfolio for the fiscal year and maintain a long-term return of 8.5%, which outperformed both the 10-year reference portfolio return of 7.2% and the 5.7% long-term return objective,” Mr. Cunningham added. “Strong returns over the past years have helped bring the pension plans into a favourable funding position.”


“Our focus on the long-term horizon has served us well during the global pandemic and has become more important than ever,” said Eduard van Gelderen, Senior Vice President and Chief Investment Officer at PSP Investments. “Before the pandemic, we were preparing for an eventual market downturn after many years of sustained growth in order to be able to respond quickly if a crisis occurred. Our strategies have proven their effectiveness in maintaining our portfolio’s stability and liquidity during tumultuous times.”





(billion $)

PMARS** $81.1B (3.0)% 4.3% 47.8%
Private Equity $24.0B 5.2% 7.2% 14.2%
Credit Investments $13.3B 4.3% 11.8%*** 7.8%
Real Estate $23.8B (4.4)% 8.3% 14.0%
Infrastructure $18.3B 8.7% 12.1% 10.8%
Natural Resources $7.6B (5.2)% 6.6% 4.5%


*This table excludes Cash and Cash equivalents and the Complementary Portfolio.

**Public Markets and Absolute Return Strategies.

***Annualized return since inception (4.3 years).


As at March 31, 2020:


PMARS, which is composed of Public Market Equities (excluding cash and cash equivalents) and Fixed Income, ended the fiscal year with $81.1 billion of net assets under management, an increase of $0.3 billion from fiscal year 2019. Overall, the group incurred a performance loss of $2.4 billion, for a one-year return of -3.0%. PMARS generated a five-year annualized return of 4.3%. Public Market Equities faced a volatile and challenging environment through the weeks ending the fiscal year: in fewer than five weeks, many of the indices lost approximately 30% of their value, experiencing one of the fastest and most significant stock market declines ever recorded. Fixed Income’s assets under management ended the year at $32.7 billion, up from $29.8 billion in 2019.


Private Equity ended the fiscal year with net assets under management of $24.0 billion, $0.5 billion more than in fiscal year 2019, and achieved a one-year return of 5.2%. Performance income reached $1.1 billion despite significant unrealized valuation losses across the portfolio due to the COVID-19 pandemic. Fiscal year 2020 was marked by continued strong deployment across the U.S. and Europe, largely offset with another record year of dispositions resulting from active monetization of significant direct investments. New co-investments totaling $3.4 billion were made primarily in the health care, financials and technology sectors including, among others, the acquisition of significant interests in Convex, a de novo specialty property and casualty insurance company; Galderma, a leading global provider of skin health products, headquartered in Switzerland; Lytx, a US-based leading provider of video telematics solutions for commercial and public-sector fleets; and Ceva Santé Animale, a French global veterinary health company well positioned to tackle issues related to feeding a growing population.


Credit Investments ended the fiscal year with net assets under management of $13.3 billion, an increase of $2.8 billion from the prior fiscal year, and generated performance income of $488 million, resulting in a 4.3% one-year return that exceeded the benchmark return of -3.7%. The group made $7.2 billion in acquisitions, which were partially offset by $3.9 billion in dispositions driven by the higher churn of its maturing portfolio and opportunistic selling prior to the COVID-19 pandemic and net valuation losses of $1.4 billion. The portfolio is well diversified across asset types, geographies, industries and equity sponsors. Benefitting from strong credit selection, the group has been able to deliver interest income that exceeds that of the benchmark since inception.


Real Estate ended the fiscal year with $23.8 billion in net assets under management, up by $0.3 billion from the previous fiscal year, and incurred a performance loss of $1.0 billion, resulting in a -4.4% one-year return. The 8.3% five-year annualized return exceeded the 6.1% benchmark return. Performance for the current year was affected by COVID-19, which generally had a negative effect on the overall portfolio. The pandemic significantly impacted the value of the global retail portfolio and more specifically the malls in the U.S. The Alberta office portfolio was particularly impacted by the pandemic and the drop in oil prices that exacerbated the negative sentiment on the Alberta economy. The impact on our global industrial assets was more subdued as the sector produced a positive return. Real Estate maintained its focus on building a world-class portfolio of assets in major international cities and deploying into high-conviction sectors. Acquisitions included a large multi-family portfolio in seven U.S. cities in partnership with Berkshire Group, a large industrial portfolio in Mexico with Advance Real Estate and a multi-family portfolio with Starlight Investments in Canada. The group also made strategic disposals of core assets that had attained their objectives in the office sector.


Infrastructure ended the fiscal year with $18.3 billion in net assets under management, a $1.5 billion increase from the prior fiscal year, and generated $1.4 billion of performance income, leading to an 8.7% one-year return exceeding the benchmark of -3.2%. Infrastructure deployment was mostly across North America and Australia and included new direct and co-investments totalling $2.3 billion. Key investments included the take-private of AltaGas Canada, a large Canadian company with natural gas distribution utilities and renewable power generation assets. The group also acquired an interest in AirTrunk, the largest independent operator of hyperscale datacentres in the Asia Pacific region.


Natural Resources ended the fiscal year with net assets under management of $7.6 billion, an increase of $0.8 billion from the previous fiscal year, and incurred a performance loss of $0.4 billion, for a one-year return of -5.2%, exceeding the -5.8% benchmark return. The five-year return for the group was 6.6%, exceeding its benchmark of 1.9%. Since-inception return also remains positive and the group has consistently exceeded its annual benchmark. Performance for the current year was dampened by COVID-19, which significantly impacted the carrying value of the group’s non-core oil and gas assets. The crisis did not have a significant impact on our core agriculture and timberland investments. The year was marked by continued strong deployment of $3.2 billion, mainly in agriculture in both Australia and North America. Notable agriculture investments included the board-supported take-private of one of Australia’s leading agribusinesses, and a buy-and-lease transaction on ~ 11,500 hectares of mature almond orchards and associated water entitlements located in Victoria, Australia. On the timber front, the group increased its exposure to Canadian timberlands in a high-quality asset with a trusted and proven management team.


Total Costs


Over the past five years, PSP Investments has been building the organization and ramping up capabilities to achieve our Vision 2021 Strategic Plan. The business units, strategies and portfolio have undergone significant transformations.  We have also continued to pursue internal active management where we have increased the allocation of the portfolio toward more private market asset classes.  Finally, we have opened international offices to build local presence in London, New York and Hong Kong.  All such efforts have already started to yield benefits indicating that associated costs will pay off.


Expressed in bps of AUM, our total cost ratio is slightly above that of fiscal year 2019.  Similarly, the operating costs ratio, a component of our total costs, remained almost at the same level as that of fiscal 2019.  Worth noting is that, absent the COVID-19 pandemic’s impact on AUM, both, the total cost ratio as well as the operating costs ratio would have been more favourable.  In fact, the operating costs ratio would have been lower in fiscal year 2020 than in fiscal year 2019.


Corporate Highlights


  • Our risk management and monitoring system prompted PSP Investments to assemble a COVID-19 Task Force in mid-January. This contributed to PSP Investments being one of the early movers in response measures and created a seamless shift to working from home starting March 2020. Some of the actions taken to support management’s cost-saving measures included suspending an increase in Directors’ compensation and temporarily freezing external hiring and annual salary increases. Moreover, PSP Investments established a special COVID-19 Emergency Relief Initiative, which raised over $700,000 for charity, of which the executive team and the Board Directors contributed $300,000. The funds will help the Red Cross, United Way, Community Foundations of Canada and HealthPartners.   In addition, PSP Investments’ CEO, Neil Cunningham, donated 50% of his FY20 salary to COVID-19-related charities. 


  • In fiscal year 2020, we advanced our total fund investment approach as part of our One PSP vision and five-year Vision 2021 strategic plan. Our Chief Investment Office launched several initiatives to enhance our ability to apply a total fund perspective when crafting investment strategies, making business decisions and managing risk, leverage and liquidity. Our Total Fund approach continued to evolve as we shifted to anchoring our performance and programs to our Reference Portfolio, which will be operationalized in fiscal year 2021.


  • We continued to deliver on our optimization program and seamlessly transitioned to a new custodian bank to support our global expansion in a cost-efficient manner. We also advanced our digital strategy to be more effective and scaled and secured technology to gain better portfolio insights and enable robust analytics and data-driven investing. We further ingrained innovation within the organization, with new investment strategies being incubated in all asset classes that leverage long-term market trends and disruptive technologies.


  • We ramped up operations in our Asian hub, with our team there successfully deploying our Asian strategy and establishing solid relationships with local partners. We expanded our presence locally with additions to our local Private Equity and Infrastructure teams.


  • We continued to develop our talent and enhance the employee experience. As part of our suite of development programs called The PSP Way, we created a new curriculum for first-time managers and launched the Leadership Journey program for senior leaders. We continued to prioritize inclusion and diversity through our eight affinity groups whose initiatives included a one-week forum offering 18 sessions with over 600 employees participating. Our employee engagement consistently scored well above industry norms.


  • We continued to embed environmental, social and governance considerations into every aspect of the investment process, across all asset classes. Accomplishments included significant progress on assessing the investment portfolio’s exposure to climate change risks and opportunities to ensure the resilience of PSP Investments long-term asset allocation. Our fourth annual Responsible Investment Report can be consulted here.


“In these difficult times, we want to reassure contributors and beneficiaries about our solid long-term financial performance that sustains the pensions of those who have served our country,” said Neil Cunningham, President and Chief Executive Officer at PSP Investments. “We built our investment portfolio and organization to be resilient and diversified. This approach has made a difference during the health crisis the world is currently experiencing.”


“Looking to the future, fiscal year 2021 marks the last year of our Vision 2021 strategic plan,” added Mr. Cunningham. “We will now work to consolidate the foundation we’ve built to support our future growth, resilience and stability in an increasingly changing investment environment. As we start to develop the next iteration of PSP Investments’ strategy, I would like to express my thanks to our team around the world for rising to each new challenge and continuing to spot opportunities that emerge.”


For more information on PSP Investments’ fiscal year 2020 performance, visit 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 $169.8 billion of net assets under management as of March 31, 2020. It manages a diversified global portfolio composed of investments in public financial markets, private equity, real estate, infrastructure, natural resources and credit investments. 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, London and Hong Kong. For more information, visit or follow us on Twitter and LinkedIn.



[1] PSP’s Reference Portfolio is a simple portfolio composed of publicly traded securities that could be passively managed at minimal cost. The Reference Portfolio is designed in such a way that, based on our long-term capital market assumptions, it is expected to deliver the Return Objective over the long-term with minimum investment risk.