The Public Sector Pension Investment Board (PSP Investments) returned 12.6% in the fiscal year ending March 31, 2025, amid a focus on beta management.
PSP Investments’ net assets under management (AUM) grew to $220B (C$299B), primarily driven by $25B (C$33.5B) of net portfolio income, according to its latest annual report. While the net return for the fiscal year underperformed its total fund benchmark return of 17.4%, it outperformed its one-year reference portfolio return by 1.5%. Over five- and 10-year periods, the pension fund saw net annualized returns of 10.6% and 8.2%, respectively, outperforming the reference portfolio benchmark return over those periods and generating $11B (C$15.1B) and $24B (C$31.9B), respectively, of excess cumulative net investment gains.
“Our well-diversified portfolio encompasses high-quality assets and multiple investment strategies aimed at maximizing long-term returns, managing risks, and building resilience,” said Deborah K. Orida, the pension fund’s president and chief executive officer, in the report. “We have ample liquidity to maintain our focus on delivering returns over the long term, and we continue to proactively incorporate potential shifts in global dynamics and economic conditions into our portfolio design process, risk management and investment decisions.”
Much of its outperformance of the reference portfolio was driven by its Complementary Portfolio, which was designed to improve the long-term risk-reward profile of the total fund through beta management. As of March 31, the strategy, which focuses on select, long-term partnerships, returned 33.1%.
The fund’s private markets assets proved to be the rising tide that lifts all boats. Indeed, infrastructure (17.8%) and credit investments (15.4%) benefited from falling interest rates; however, the main driver of their performance hinged on gains made through exposure to foreign currencies amid a sinking Canadian dollar. Despite uncertainties related to U.S. tariffs in the early part of 2025, the private equity portfolio managed to return 16.6%.
PSP Investments’ natural resources assets also saw a modest return of 8.6%, while its real estate portfolio remained flat with a return of 0.03% due to exposure to the office and residential sectors.
The pension fund’s public markets equities returned 15.1%, supported by all segments of the market and its fixed income asset allocation also saw a double digit return both in developed (10.1%) and emerging (11.7%) markets. The report noted the fund’s beta management strategy focused on strengthening and scaling up its equity and fixed income lending activities.
The pension fund invests on behalf of the pension plans transferred to it by the Government of Canada, including the federal Public Service $161.6B (C$219.4B), the Canadian Forces $42.0B (C$57.1B), the Royal Canadian Mounted Police $15.9B (C$21.6B) and the Reserve Force, roughly $1B (C$1.2B).
PSP Investments’ Canadian exposure represents approximately $50.6B (C$68.7B) and includes significant investments in public equities, real estate, natural resources, and infrastructure. “In this coming fiscal year, we are assessing the potential for increased investment in areas where Canada’s strengths and PSP Investments’ expertise intersect,” said Orida.
The Canada Growth Fund Investment Management team closed 12 transactions across five provinces since its launch in 2023. As of March 2025, the team had committed roughly $1.8B (C$2.4B) to projects that aim to fuel growth of Canada’s clean economy.
