Pension Fund Deploys C$10 Billion at Home in ‘Buy Canada’ Push

t{pgrk5)iaa0g0wr2[02cmei_media_dl_1.png PSP's annual report

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(Bloomberg) — Canada’s Public Sector Pension Investment Board said it invested C$10 billion ($7.2 billion) in the country over 12 months as it pushes ahead with plans to deploy more capital at home. 

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The pension manager posted a 6.5% return, trailing its benchmark for the 12 months ended March 31, according to its annual report released on Tuesday. Net assets under management rose 7%, to C$320.6 billion. The recent C$10 billion brings the total amount invested in Canada to more than C$75 billion. 

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“We are working across asset classes to really leverage what I call our home ice advantage,” Chief Executive Officer Deborah Orida said in an interview, using a hockey metaphor. 

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Over the past year, the pension fund increased its existing allocation to Canadian equities and also launched a new Canadian public-equity strategy, which will open up opportunities for cross-asset investments. 

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“We’re seeing the opportunity to leverage those high level meetings that we’re having with Canadian corporates to also bring in our teams from infrastructure and private credit,” Orida said.

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The increased investment in Canada comes amid a broader push for the country’s largest pension plans to invest more capital domestically. As part of the effort, Canada’s federal government is laying the groundwork to attract private investment into the country’s airports, opening the door to infrastructure investors that have long sought access to the assets. 

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PSP is “well-positioned” to bring both capital and operating expertise to airport investments, Orida said. 

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Public equities returned 20.6% during the fiscal year ended March 31, while infrastructure investments gained 10.1%. The pension plan said it is exposed to the software sector through its investments in private equity and credit, which delivered 5.3% and 3.1% in returns, respectively. 

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Asked whether PSP has invested in SpaceX, Orida declined to discuss specific holdings. She said understanding the disruptive potential of companies such as SpaceX remains important for long term investors. 

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“We do the work around those names because it’s important to understand what potential disruptive threats may be coming on the horizon,” she said. 

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Strategy Shift 

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PSP’s real estate portfolio lost 7.3% during the period. The decline was driven by markdowns and currency movements, according to the report. 

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Real estate is “the one asset class where we are going through a strategy shift,” Orida said. The pension fund is moving away from an opportunistic approach to a disciplined strategy focused on core sectors, such as logistics-related real estate and residential. 

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Also as part of the shift, the pension plan is reducing its exposure to real estate in places like Brazil, Mexico and China, according to the CEO. 

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Residential investments make up about 30% of PSP’s real estate portfolio, while industrials and offices comprise 27.7% and 19.2%, respectively.  

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