Plan ramps up Canadian investment amid volatile global markets
The Public Sector Pension Investment Board (PSP Investments), one of Canada’s Maple Eight pension funds, closed fiscal 2026 with $320.6 billion in net assets under management, a 7.0 per cent increase from the prior year, according to its release on Tuesday.
But its one-year net return of 6.5 per cent trailed its Reference Portfolio by 5.2 percentage points, the widest single-year gap the fund has reported in recent memory.
The shortfall, PSP noted, was concentrated in private markets as macroeconomic and market conditions created a more challenging environment for private assets, and the use of public-market-based benchmarks amplified the divergence over the shorter time horizon.
Real estate was the weakest performer, posting a negative 7.3 per cent return for the year and a negative 0.5 per cent annualized return over five years. Contrastingly, public market equities returned 20.6 per cent, underscoring the valuation gap between listed and unlisted holdings that weighed on overall results.
Currency movements detracted 2.2 per cent during the fiscal year, partially reversing 5.8 per cent of currency gains recorded in fiscal 2025.
"Despite heightened volatility and uncertainty, PSP Investments delivered solid results and continued to strengthen the long-term funding position of the pension plans we support," Deborah K. Orida, president and CEO, said in a statement, adding that the fund's long-term results, return stability, and plan funding levels were the more meaningful indicators of performance.
PSP has outperformed the Reference Portfolio on a one-year basis roughly 70 per cent of the time since inception, and over 10 years the fund delivered a net annualized return of 8.8 per cent, generating $14.5 billion in cumulative net investment gains above the benchmark.
Infrastructure led the private asset classes at 10.1 per cent for the year and 12.7 per cent annualized over a decade. Private equity returned 5.3 per cent for the year, while credit investments came in at 3.1 per cent. Natural resources posted 2.4 per cent. Fixed income returned 2.3 per cent for the year and 3.2 per cent over 10 years.
On the cost side, PSP reported an operating cost ratio of 24.7 basis points, down from 27.9 basis points the previous year, a decline the fund attributed to portfolio streamlining and asset sales under its three-year strategic plan. Total costs, including financing and external manager fees, rose slightly to $3.942 billion from $3.885 billion in fiscal 2025.
Orida acknowledged the fund’s domestic investment activity as a bright spot.
"In fiscal 2026, we invested over $10 billion in Canada, primarily driven by increased direct private investments and a higher allocation to Canadian equities, which performed well this year," she said.
Gross assets under management in Canada exceeded $75 billion as of March 31, 2026.
Separately, PSP's subsidiary Canada Growth Fund Investment Management continued to manage the $15-billion Canada Growth Fund, which has completed 18 transactions totalling approximately $5 billion in Canadian commitments.
PSP manages pension assets for the federal Public Service, the Canadian Armed Forces, the RCMP, and the Reserve Force. Investment returns account for approximately 70 per cent of net assets under management, with Government of Canada fund transfers making up the remaining 30 per cent.
