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PSP Investments Adapts to Market Volatility

Strategic Insights

— 1 min read

The Public Sector Pension Investment Board (PSP Investments), a Canadian pension fund manager, has shifted its investment strategy in response to market swings and trade tensions. Despite earning 12.6% in the last fiscal year, PSP is re-examining its portfolio, particularly its significant investments in the United States, where more than 40% of its assets are allocated. The fund's chief executive officer, Deborah Orida, indicated a desire to explore other developed markets, such as Europe and Asia, and refresh its portfolio to mitigate risks associated with U.S. markets.

Key Takeaways:

  • PSP Investments earned 12.6% in the last fiscal year, missing its internal benchmark by 4.8 percentage points.
  • More than 40% of PSP's assets are invested in the United States, double the 20% allocated to Canada.
  • The fund's annual return outperformed a reference portfolio by 1.5 percentage points and beat its benchmark over 10 years, earning an average annual return of 8.2%.
  • PSP benefited from large gains on foreign currency fluctuations, with 5.8 percentage points of its 12.6% gain coming from foreign exchange.
  • The fund recently created models to gauge the impact of a potential U.S. Senate tax measure on its investments, with Orida stating that it is "manageable" but could affect future investments.
  • PSP is hopeful that it can find more deals in Canada and is re-examining its investment strategy to take advantage of "home-ice" advantages.

Statistics:

  • PSP Investments earned 12.6% in the last fiscal year, with 5.8 percentage points of that gain coming from foreign exchange.
  • The fund's annual return outperformed a reference portfolio by 1.5 percentage points.
  • PSP's average annual return over 10 years was 8.2%, beating its benchmark of 7.1%.
  • The fund's total assets increased 13.2% to $299.7 billion from $264.9 billion in the previous year.
  • PSP's investment in the 407 Express Toll Route, a highway in the Greater Toronto Area, was its largest Canadian investment.

Sources:

  • Globe and Mail, "PSP Investments adapts to market volatility, seeks more Canadian deals" (exact format as mentioned in the source).

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