The Public Sector Pension Investment Board’s growing infrastructure portfolio has showed a 14.4 percent return over the one-year period ending 31 March, the firm said on Wednesday.
This represents close to triple the return target of 5.2 percent for the asset class, according to a statement. The Canadian pension plan boosted its infrastructure assets to C$11 billion ($8.3 billion; €7.41 billion) by March, up from C$8.7 billion a year prior.
By comparison, PSP’s total assets under management reached $135.6 billion, a 16.1 percent increase from $116.8 billion in AUM a year earlier.
With 47.1 percent of its infrastructure portfolio in Europe, and 22.9 percent in the US, the group committed a total of C$2.6 billion. It made C$1.8 billion of direct investments, and made allocations to four funds, three with new partners.
The infrastructure allocation’s strong performance was “mainly attributable to investments in Europe and emerging markets, particularly in the transportation, communications and renewable energy sectors,” the annual report read.
The firm was not immediately available to comment further.
Other asset classes in the pension plan’s portfolio also surpassed return benchmarks over this period.
Real estate showed a one-year return of 10.8 percent, compared with its 6.2 percent benchmark. The report cited office portfolios in Paris, London and in Australia and senior retirement and healthcare portfolios in Canada and the UK for causing the allocation’s strong performance. This asset class grew slightly to C$20.6 billion in net assets, up from C$20.4 billion 31 March 2016, with nearly 43 percent of its portfolio in the US.
Private debt earned a 27.5 percent one-year return, more than double its 12.4 percent return target. PSP said the strong performance was due to “the ramp up nature of the asset class, which in early years enhances the impact of fee income and mark-to market gains from a return perspective.” This asset class hit C$4.4 billion in net assets by 31 March, up from C$640 million a year prior.
In contrast with private debt, real estate and infrastructure, the firm’s private equity portfolio’s performance “remains a challenge” and was “negatively impacted by certain legacy investments in technology and communications”, the annual report read.
Private equity showed a one-year loss of 3.4 percent and only a 7.8 percent five-year annualised return. Its one-year return target is 9.3 percent. Still, the firm was able to grow this asset class by C$3.4 billion, to C$15.5 billion, as of 31 March.
The $135.6 billion PSP overall portfolio generated a 12.8 percent net return the year ending in March and five-year annualised net return of 10.6 percent, above its 9.4 percent portfolio benchmark return.