PSP Investments Reports 4.4% Return in Fiscal 2023

The Canadian pension investment manager raised its net AUM to $182.3 billion.




Canadian pension investment manager the Public Sector Pension Investment Board reported a 4.4% return for fiscal 2023, easily beating its benchmark’s return of 0.2% and raising its net assets under management to C$243.7 billion ($182.3 billion) from C$230.5 billion at the end of fiscal 2022. 

Net transfers received from the federal government represented C$2.9 billion, while net income generated C$10.2 billion.

PSP Investments reported five- and 10-year annualized returns, net of expenses, of 7.9% and 9.2%, respectively, outperforming its benchmark’s returns of 5.5% and 7.4%, respectively, over the same time periods. According to the board, this outperformance yielded C$25.4 billion and C$31.2 billion, respectively, in cumulative net investment gains above its benchmark.

“Our strategy to diversify into private markets and expand internationally has been key to maintaining stability in exceptionally volatile financial markets,” PSP Investments CIO Eduard van Gelderen said in a release. “Our foreign currency exposure is an important component of our portfolio construction approach.”

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Public Sector Pension Investment Board Fiscal 2023 Returns

The Canadian pension manager easily beat its benchmark. Chart reflects asset classes (at March 31, 2023) and net assets under management*.

One-year return
Five-year return
10-year return
Capital Markets: $98.5B AUM
0.3%
5.8%
8.2%
Private Equity: $37.2B AUM
3.3%
15.6%
12.1%
Credit Investments: $26.1B AUM
13.1%
8.9%
11.2%
Real Estate: $32.0B AUM
0.2%
6.0%
9.2%
Infrastructure: $29.4B AUM
19.0%
10.5%
11.7%
Natural Resources: $12.3B AUM
10.9%
8.5%
11.2%
Complementary Portfolio: $2.2B AUM
-0.2
5.8%
10.1%
 *Table excludes cash and cash equivalents. All currency amounts in Canadian dollars.
Source: Public Sector Pension Investment Board

Van Gelderen said the board’s foreign currency exposure during the fiscal year contributed 5.8% to its net return, as the euro and British pound rebounded, while its open U.S. dollar exposure mitigated the total fund’s downside risk.

PSP’s infrastructure portfolio contributed the most to the fiscal year’s investment gain, ending with net assets under management of C$29.4 billion as of March 31, a C$5.9 billion increase from a year earlier, while generating portfolio income of C$4.6 billion. The five-year annualized return of 10.5% for the asset class more than doubled its benchmark’s 4.8% return.

The board attributed the strong performance within the infrastructure portfolio to the current high inflationary environment, despite generally higher discount rates. It identified the transportation sector as the main contributor to the portfolio’s income, while the communications sector also provided a significant contribution.

Credit investments were also a major contributor to the investment gain and closed out the fiscal year with C$26.1 billion AUM, up $4.2 billion from the end of the previous fiscal year, while generating portfolio income of C$3.1 billion. The portfolio’s growth was mainly attributed to acquisitions of $6.7 billion and foreign currency gains of $1.7 billion, while the 8.9% five-year annualized return easily outperformed the 3.7% benchmark return.

However, the capital markets portfolio, made up of public equities and fixed income, offset some of PSP’s investment gains and ended the fiscal year with $1.4 billion fewer AUM to C$98.5 billion from the end of fiscal 2022. Despite the loss, the portfolio’s five-year return of 2.4% outperformed its benchmark’s five-year by 0.3%. The board said fixed income’s positive performance in fiscal 2023 was mainly due to defensive positioning with a significant short duration bias amid the general bond market downturn caused by a global increase in interest rates.

“These results are indicative of the resilience of our diversified portfolio,” Deborah Orida, PSP Investments’ CEO and president, said in a release.


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Howard Perlow Named Angeles Investments’ 1st CEO

The investment firm also promoted David Brief to head of its OCIO practice.

 




Angeles Investments has named co-founder Howard Perlow as the investment firm’s first CEO and promoted David Brief to the newly created position of head of OCIO.

Perlow co-founded Santa Monica, California-based Angeles Investments, which has approximately $6 billion in discretionary assets and $32 billion in advisory assets, with CIO Michael Rosen in 2001. Prior to founding Angeles, Perlow began his career at Wilshire Associates, followed by founding and operating Asset Strategy Consulting.

“Howard’s dedication in leading the organization, the relationships he holds with clients and colleagues, and his innovative, solution-oriented thinking has enabled him to seamlessly take on this new role,” Rosen said in a release. “Paired with David’s leadership and expertise across the OCIO industry, Angeles has a promising future ahead.”

Brief joined Angeles Investments in 2018 as senior managing director and has specialized in educating nonprofits about the benefits of outsourced investment management. Before joining the firm, he was CIO of the Jewish Federation of Metropolitan Chicago, helping the endowment’s portfolio grow to a $1.1 billion pool of investment assets belonging to several dozen nonprofits from a $350 million internal investment program.

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Prior to working at the Jewish Federation of Metropolitan Chicago, Brief was a principal in investment consulting services firm Ennis Knupp & Associates, before becoming a senior consultant at benefits and human resources consulting firm Segal Rogerscasey. He started his career as a senior consultant at Ibbotson Associates.

“I’ve seen this organization change and grow over the years,” Perlow said in a release, “Moving David into the newly created head of OCIO role is a strong statement of our commitment to this business, and to our clients, for the years to come.”

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