PSP posts 7.1% return for fiscal 2019
The fund increased its overall assets under management by 9.7 per cent, jumping from $153.1 billion to $168 billion, including the $3.7 billion the fund received in net contributions. The returns lagged behind fiscal 2018’s strong 9.8 per cent return.
“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 the PSP, in a press release. “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.”
The private equity segment of the portfolio posted the highest returns of any asset class last year, at 16.1 per cent, significantly beating the segment’s five-year annualized return of 7.9 per cent. The segment has been growing in recent years, driven primarily by acquisition of new direct and co-investments, mainly in the industrial, health care, communications and financial sectors, the release noted.
However, during the last fiscal year, private equity made up just 14 per cent of the overall portfolio, as did real estate, which saw a 7.6 per cent return. The public markets segment, the portfolio’s largest overall component at 48.1 per cent, includes public market investments, fixed income and absolute return strategies. It returned 4.6 per cent, with a five-year annualized return of eight per cent.
Private debt saw a 9.2 per cent return, while infrastructure posted 7.1 per cent. Natural resources also faired especially well, with a return of 11.1 per cent. Fiscal 2019 saw significant deployment of capital in Australia, North America and certain regions in Latin America, with new agriculture joint ventures taking centre stage, the release noted.
“Fiscal year 2019 was impacted by higher volatility in public markets amid concerns of a global economic slowdown,” said 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.”