The Public Sector Pension Investment Board (PSPIB) is directing more attention towards investing in Canada and regions outside the United States following market volatility that tested the $300-billion fund, which yielded a 12.6% return in the fiscal year ending March 31.

Amidst months of uncertainty due to tariffs, trade disputes, and potential new U.S. tax measures, PSP Investments is reconsidering its investment strategies.

Managing pensions for the federal public service, Canadian Armed Forces, and the RCMP, PSP currently has over 40% of its assets in the U.S., twice the 20% allocated to Canada. With U.S. markets facing instability, PSP is exploring ways to diversify its portfolio.

CEO Deborah Orida stated, "We're fully aware that the world has changed. I think it behooves us to think about other developed markets – maybe even some that we've not focused on as much before."

PSP's 12.6% return in the past fiscal year fell short of its internal benchmark by 4.8 percentage points. While privately-owned assets in PSP's portfolio delivered strong returns, they struggled to match benchmarks dominated by publicly traded stocks that surged last year.

Over a decade, PSP achieved an average annual return of 8.2%, outperforming its 7.1% benchmark. The fund's total assets rose by 13.2% to $299.7 billion from the previous year.

Ms. Orida expressed satisfaction with the results, highlighting the portfolio's strength and resilience. PSP benefited from significant gains due to foreign currency fluctuations, particularly from its exposure to U.S. dollars.

Despite the challenges posed by market upheavals, PSP remains confident in its ability to navigate volatility and maintain a long-term focus. The fund is prepared to manage any potential impacts from U.S. tax measures and is considering future investments with caution.

PSP recently made a substantial Canadian investment by acquiring a multibillion-dollar stake in the 407 Express Toll Route, a highway in the Greater Toronto Area, from the Canada Pension Plan Investment Board. Ms. Orida hopes to explore more investment opportunities in Canada, Europe, and Asia.

She emphasized, "One thing that we've been asking ourselves as it relates to Canada is: Have we been historically underleveraging our home-ice advantage?"

Source: The Globe and Mail