Wednesday, June 13, 2018

PSP Investments Gains 9.8% in Fiscal 2018

Benefits Canada reports, PSP Investments posts 9.8 per cent return for fiscal 2018:
At the end of its 2018 fiscal year, the Public Sector Pension Investment Board posted a net return of 9.8 per cent, representing $13.5 billion in income.

While the result wasn’t as hefty as last year’s 12.8 per cent, the fund beat its benchmark portfolio return of 8.7 per cent. The increase in assets marks a 12.9 per cent jump from the prior fiscal year.

“This is a year we can be proud of,” said Neil Cunningham, president and chief executive officer at PSP Investments, in a press release. “We sustained performance over a year marked by market volatility, which shows clearly that our strategic focus on increased diversification is generating returns.

“Once again, our people highlighted the possible in their active commitment to our shared purpose: to contribute to the financial security of the contributors and beneficiaries who have served Canada throughout their careers.”

PSP Investments saw an 8.3 per cent return from public equities, the largest component of its portfolio at 50.1 per cent. It experienced strong gains for most of the year with increased volatility coming into play largely in the fourth quarter, the release noted.

The fund’s $15 billion of infrastructure investments was also a standout, yielding a 19.3 per cent return, with real estate also posting a particularly strong result of 13.6 per cent. Private equity fared much better than the previous fiscal year when it posted an overall loss of 3.4 per cent. This year, it returned 12.9 per cent, with $19.4 billion under management. The fund attributes the stronger results to valuation gains, primarily in the financial and industrial sectors.

PSP Investments’ private debt portfolio, which returned 8.2 per cent, more than doubled in the 2018 fiscal year, to $8.9 billion from $4.5 billion. Notably, the fund significantly increased its debt allocation in Europe, which now accounts for 24 per cent of its global private debt portfolio, up from eight per cent the previous year.

Natural resources also saw double-digit returns, yielding 11.2 per cent versus its 3.1 per cent benchmark. In the 2018 fiscal year, the fund increased its allocation to agriculture within that segment, which now accounts for $2 billion in assets.

PSP Investments also made a number of appointments in the last fiscal year, including Pierre Gibeault as managing director and head of real estate investments, Simon Marc as managing director and head of private equity, Patrick Samson as managing director and head of infrastructure investments and Marc Drouin as managing director and head of natural resources.

“Our talented, high-performing people and expanded global footprint have allowed us to spot the edge and deliver solid and consistent results,” said Cunningham. “Our vision is to be a leading global institutional investor, a partner of choice to the investment world and an enabler of complex investments.”
James Comtois of Pensions & Investments also reports, PSP Investments returns 9.8% for fiscal year, tops benchmark:

PSP Investments, which manages the assets of the C$153 billion ($118.2 billion) Public Sector Pension Investment Board, Ottawa, returned a net 9.8% in the fiscal year ended March 31, above the policy benchmark of 8.7%, a news release said.

The best-performing asset class was infrastructure, which returned a net 19.3% compared to its 12.1% benchmark return, followed by real estate at a net 13.6% return, vs. its 12.3% benchmark return; private equity, 12.9% vs. its 17.6% benchmark; natural resources, 11.2% vs. its 3.1% benchmark; public markets, 8.3% vs. its 7.7% benchmark; and private debt, 8.2% vs. its 2.3% benchmark.

The overall five-year annualized net return was 10.5%, above the policy benchmark's 9.4% return. Its 10-year net annualized return of 7.1% was above the return objective of 5.8%.

As of March 31, the actual allocation was 50.1% public markets, 15.2% real estate, 12.7% private equity, 9.8% infrastructure, 5.8% private debt, 3.2% natural resources, and the rest in cash and cash equivalents.
And Steve Randall of Wealth professional reports, PSP chief: "This is a year we can be proud of":
The boss of Canada’s Public Sector Investment Board has expressed his pride in its annual results which have seen a 12.9% growth in net assets.

PSP Investments ended the fiscal year March 31, 2018 with net assets of $153.0 billion, compared to $135.6 billion the previous fiscal year; a one-year total portfolio net return of 9.8% on its investments; and generated $13.5 billion of net income, net of all PSP costs. This return is significantly greater than the Policy Portfolio benchmark return of 8.7%.

"This is a year we can be proud of," said Neil Cunningham, President and Chief Executive Officer at PSP Investments. "We sustained performance over a year marked by market volatility, which shows clearly that our strategic focus on increased diversification is generating returns."

Where PSP gained the most

The results show that PSP Investments saw gains across its portfolio, smashing benchmarks:
  • Public Markets had net assets under management of $76.7 billion, a decrease of $0.5 billion from fiscal year 2017, and generated investment income of $6.3 billion, for a one-year return of 8.3%, compared to a benchmark of 7.7%.
  • Real Estate had $23.2 billion in net assets under management, up by $2.6 billion from the previous fiscal year, and generated $2.8 billion in investment income, resulting in a 13.6% one-year return versus 12.3% for the benchmark.
  • Private Equity had net assets under management of $19.4 billion, $3.5 billion more than in fiscal year 2017, and generated investment income of $2.1 billion, for a one-year return of 12.9%—versus a 3.4% loss in fiscal year 2017—compared to a benchmark return of 17.6%.
  • Infrastructure had $15.0 billion in net assets under management, a $3.9 billion increase from the prior fiscal year, and generated $2.3 billion of investment income, leading to a 19.3% one-year return, relative to the benchmark return of 12.1%.
  • Private Debt had net assets under management of $8.9 billion, an increase of $4.5 billion from the prior fiscal year, and generated net investment income of $569 million, resulting in an 8.2% one-year return, compared to a benchmark of 2.3%.
  • Natural Resources had net assets under management of $4.8 billion, an increase of $1.1 billion from the previous fiscal year, and generated record investment income of $450 million, for a one-year return of 11.2%, versus the 3.1% benchmark.
Talented people helping vision of leading global investor

"Our talented, high-performing people and expanded global footprint have allowed us to spot the edge and deliver solid and consistent results," Mr. Cunningham said. "Our vision is to be a leading global institutional investor, a partner of choice to the investment world and an enabler of complex investments. We have the knowledge, talent, systems and flexibility to seize global opportunities as they arise."
PSP Investments put out a press release, PSP Investments posts strong performance in fiscal year 2018. Net return of 9.8% brings net assets to $153.0 billion:
  • One-year total portfolio net return of 9.8% generated $13.5 billion of net income, net of all PSP costs.
  • Five-year annualized net return of 10.5% which is 1.1% above the Policy Portfolio benchmark return.
  • Ten-year net annualized return of 7.1% generated $23.8 billion of cumulative net investment gains above the return objective of 5.8%.
The Public Sector Pension Investment Board (PSP Investments) announced today that it ended its fiscal year March 31, 2018 with net assets of $153.0 billion, compared to $135.6 billion the previous fiscal year, an increase of 12.9%. The investment manager reported a one-year total portfolio net return of 9.8% on its investments and generated $13.5 billion of net income, net of all PSP costs. This return is significantly greater than the Policy Portfolio benchmark return of 8.7%.

“This is a year we can be proud of,” said Neil Cunningham, President and Chief Executive Officer at PSP Investments. “We sustained performance over a year marked by market volatility, which shows clearly that our strategic focus on increased diversification is generating returns. Once again, our people highlighted the possible in their active commitment to our shared purpose: to contribute to the financial security of the contributors and beneficiaries who have served Canada throughout their careers.”

Net assets increased by $17.4 billion in fiscal year 2018, attributable to net income of $13.5 billion and net contributions of $3.9 billion. All asset classes saw strong returns.

Asset Class Highlights (click on image)


As of March 31, 2018:

Public Markets had net assets under management of $76.7 billion, a decrease of $0.5 billion from fiscal year 2017, and generated investment income of $6.3 billion, for a one-year return of 8.3%, compared to a benchmark of 7.7%. Public Markets continued to generate significant returns in fiscal year 2018, despite increased geopolitical risk, market volatility and rising interest rates, mainly during the fourth quarter. At fiscal 2018 year-end, net assets managed in active strategies totalled $45.8 billion, up from $38.8 billion the previous year, while net assets managed in internal active strategies totalled $31 billion, up from $24.6 billion.

Real Estate had $23.2 billion in net assets under management, up by $2.6 billion from the previous fiscal year, and generated $2.8 billion in investment income, resulting in a 13.6% one-year return versus 12.3% for the benchmark. Fiscal year 2018 was a year of stabilization and consolidation, reflecting the maturity of the Real Estate portfolio. The group achieved strong performance despite an ongoing low-yield environment. During fiscal year 2018, Pierre Gibeault was appointed Managing Director and Head of Real Estate Investments.

Private Equity had net assets under management of $19.4 billion, $3.5 billion more than in fiscal year 2017, and generated investment income of $2.1 billion, for a one-year return of 12.9%—versus a 3.4% loss in fiscal year 2017—compared to a benchmark return of 17.6%. The strong increase in fiscal year 2018 performance was mainly driven by strong valuation gains, notably in the financial and industrial sectors, but was partially offset by underperformance of certain investments. However, investments completed in the last three years, representing $9.9 billion of assets, have generated returns significantly above benchmark. Private Equity deployed a total of $4.4 billion (including $2.3 billion in new direct investments and co-investments) and committed a total of $4.1 billion for future deployment through 17 funds, 11 of which are with new fund partners. During fiscal year 2018, Mr. Simon Marc was appointed Managing Director and Head of Private Equity.

Infrastructure had $15.0 billion in net assets under management, a $3.9 billion increase from the prior fiscal year, and generated $2.3 billion of investment income, leading to a 19.3% one-year return, relative to the benchmark return of 12.1%. The group deployed $3.3 billion in fiscal year 2018, including $2.2 billion in direct investments. During fiscal year 2018, Mr. Patrick Samson was appointed Managing Director and Head of Infrastructure Investments.

Private Debt had net assets under management of $8.9 billion, an increase of $4.5 billion from the prior fiscal year, and generated net investment income of $569 million, resulting in an 8.2% one-year return, compared to a benchmark of 2.3%. The group deployed net $4.3 billion across over 30 transactions, including investments in revolving credit facilities, first and second lien term loans, and secured and unsecured bonds. The group’s London team made great strides toward its long-term portfolio allocation target, with European assets under management accounting for 24% of the global Private Debt portfolio, up from 8% the prior year.

Natural Resources had net assets under management of $4.8 billion, an increase of $1.1 billion from the previous fiscal year, and generated record investment income of $450 million, for a one-year return of 11.2%, versus the 3.1% benchmark. The increase in net assets under management resulted primarily from $864 million in net deployments and $332 million in valuation gains. Income was driven by strong cash flows and valuation gains. The group made significant progress again this year in diversifying its investments into the agriculture sector, which now account for $2 billion of assets under management. During fiscal year 2018, Mr. Marc Drouin was appointed Managing Director and Head of Natural Resources.

Corporate Highlights
  • Our Board of Directors appointed Neil Cunningham as President and CEO on February 7, 2018. Prior to this appointment, Mr. Cunningham served as PSP’s Senior Vice President, Global Head of Real Estate and Natural Resources at the organization.
  • We launched our Inclusion & Diversity (I&D) Forum and initiated an I&D Council co-chaired by Mr. Cunningham, for whom an active commitment to inclusion and diversity is a top priority.
  • We also received an important accolade by being recognized as one of Montréal’s Top Employers.
  • This year’s annual report marks the launch of PSP’s new brand, Spot the Edge, which embodies our passion for exploring every angle, across asset classes, markets and industries, to broaden our perspectives and hone in on opportunities.
  • We continued to integrate environmental, social and governance factors into our investment decision-making process across asset classes. Significant progress was made on all pillars of our responsible investment strategy. Our second annual Responsible Investment Report can be consulted here.
“Our talented, high-performing people and expanded global footprint have allowed us to spot the edge and deliver solid and consistent results,” Mr. Cunningham said. “Our vision is to be a leading global institutional investor, a partner of choice to the investment world and an enabler of complex investments. We have the knowledge, talent, systems and flexibility to seize global opportunities as they arise.”

For more information on PSP Investments’ fiscal year 2018 performance, please visit our dedicated microsite at www.investpsp.com or download the annual report here.

About PSP Investments

The Public Sector Pension Investment Board (PSP Investments) is one of Canada's largest pension investment managers with $153 billion of net assets as of March 31, 2018. It manages a diversified global portfolio composed of investments in public financial markets, private equity, real estate, infrastructure, natural resources and private debt. Established in 1999, PSP Investments manages net contributions to the pension funds of the federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montréal and offices in New York and London. For more information, visit investpsp.com or follow us on Twitter and LinkedIn.
Before I begin my analysis, take the time to peruse PSP's revamped website here and more importantly, take the time to read the fiscal 2018 annual report which is available here.

At a minimum, you should take the time to review the highlights (pages 6-7), mindful investing through the ESG lens (pages 8-10), main corporate objectives (pages 10-11) and then take the time to read the Chair's message (pages 14-15) as well as the President's report (pages 17-18).

Martin J. Glynn, PSP's Chair of the Board, discussed three key Board projects:
Policy Portfolio

The Board of Directors approves, and annually reviews, the Statement of Investment Policies, Standards and Procedures (SIP&P), which governs the strategic allocation of assets, known as the Policy Portfolio. This year, the Treasury Board of Canada communicated to PSP a lower 10-year real rate of return target. The Board reviewed and approved adjustments proposed by management, which reduce the pension funding risk, while maintaining the Policy Portfolio’s ability to generate a comfortable return margin above the Reference Portfolio. (See the MD&A on p. 34 for more details.)

Succession planning

With the departure of two directors and the terms of other directors having expired or ending in the near future, the Governance Committee and the Board focused considerable energy in fiscal year 2018 on ensuring that a strong succession planning and director onboarding process is in place for individual directors, as well as committee chairs. The HRCC also supported the organization’s mandate toward top-tier practices in succession planning for management.

The management succession plan was put to the test this year, and it proved successful, in allowing us to appoint Neil as President and CEO.

Climate change

The Board worked closely with the organization’s Responsible Investment team to initiate a review of the portfolio’s exposure to climate change risk and developed tools to ensure those risks are incorporated into PSP’s underwriting and decision-making. This entails developing and implementing investment policies and processes to make the portfolio more resilient to the impacts of climate change, as well as encouraging enhanced disclosure on climate change risks by companies in which PSP invests. Read more about this in our separate 2018 Responsible Investment Report.
The most important thing that caught my eye in the Chair's message was that the Treasury Board of Canada communicated to PSP a lower 10-year real rate of return target.

One of the most important pages in the annual report is page 36 which explains the link between the Return Objective, Reference Portfolio, Policy Portfolio and Active Portfolio (click to enlarge):


As you can read, In fiscal year 2018, TBS lowered the long-term Return Objective to 4.0%, down from 4.1%. TBS also introduced a real Return Objective of 3.3% for the next 10 years.

It's my understanding that important discussions took place between the Treasury Board, the Office of the Chief Actuary and PSP in regards to the real return target over the last few years and basically it was communicated that we will be in a low rate, low return world for a prolonged period and the return objective must be lowered to achieve targets taking an acceptable level of risk.

As far as Policy Portfolio benchmarks, I note the following on page 39:
During fiscal year 2017, as part of the review of our compensation framework, we reviewed the benchmarks of many asset classes to improve their alignment with their respective investment strategies and market performance. The revised benchmarks came into effect on April 1, 2017 and were used to evaluate our performance for fiscal year 2018.

The benchmarks in the table below were used to measure fiscal year 2018 relative performance for each asset class set out in the SIP&P as well as for the overall Policy Portfolio (click on image).


Benchmarks are very important, they have to reflect the underlying risks being taken and must be in line with the overall return long-term return target of the organization.

I would have liked to have seen a detailed discussion on benchmarks in regards to PSP's private market asset classes: private equity, infrastructure, real estate and natural resources.

Instead, the first footnote states: "Thee customized benchmark is determined as the sum of the asset class’ Long-Term Capital Market Assumptions and a market adjustment to capture short-term market fluctuations."

Now, from the press release, let's focus on the performance of private markets including private debt:
  • Real Estate had $23.2 billion in net assets under management, up by $2.6 billion from the previous fiscal year, and generated $2.8 billion in investment income, resulting in a 13.6% one-year return versus 12.3% for the benchmark.
  •  Private Equity had net assets under management of $19.4 billion, $3.5 billion more than in fiscal year 2017, and generated investment income of $2.1 billion, for a one-year return of 12.9%—versus a 3.4% loss in fiscal year 2017—compared to a benchmark return of 17.6%. The strong increase in fiscal year 2018 performance was mainly driven by strong valuation gains, notably in the financial and industrial sectors, but was partially offset by underperformance of certain investments. However, investments completed in the last three years, representing $9.9 billion of assets, have generated returns significantly above benchmark.
  • Infrastructure had $15.0 billion in net assets under management, a $3.9 billion increase from the prior fiscal year, and generated $2.3 billion of investment income, leading to a 19.3% one-year return, relative to the benchmark return of 12.1%.  
  • Private Debt had net assets under management of $8.9 billion, an increase of $4.5 billion from the prior fiscal year, and generated net investment income of $569 million, resulting in an 8.2% one-year return, compared to a benchmark of 2.3%.
  • Natural Resources had net assets under management of $4.8 billion, an increase of $1.1 billion from the previous fiscal year, and generated record investment income of $450 million, for a one-year return of 11.2%, versus the 3.1% benchmark.  
The table below from page 42 of the annual report provides the portfolio returns by asset class (click on image):


It should be noted PSP doesn't hedge currency risk which hurts it in years where foreign currencies (mostly US dollar) underperform the Canadian dollar (click on image).


Just by quickly glancing the asset class return table above and the press release, I can tell PSP reworked its private market benchmarks to make them more reflective of the underlying risks of each portfolio but I still have questions on the benchmarks for Private Debt and Natural Resources which both seem way too easy to beat relative to the benchmarks for Real Estate, Private Equity and Infrastructure.

Let me be clear here, all the private market asset classes at PSP performed exceptionally well in fiscal 2018, including Private Equity which underperformed its benchmark by 470 basis points. PSP's Private Equity is ramping up its direct investing through more co-investments, and Simon Marc, the head of Private Equity, is doing a great job there.

My point is to highlight important nuances and that we need more information on these private market benchmarks to be able to evaluate the performance of each portfolio relative to their benchmark and some are obviously much harder to beat than others. You cannot just look at one-year results to pass judgment.

And let let be clear, benchmarks are not as easy as you think, especially in private markets. Go read my recent comment on whether Vestcor's benchmarks are a joke where I went over the history of PSP's Real Estate benchmark which has changed for the better and also added this:
[...] when you're working at a public pension fund, I have an issue with people gaming their benchmark, especially in private markets where things aren't always straightforward when it comes to benchmarks.

Somebody told me that Ontario Teachers' has a "Benchmark Committee" steered by its CEO, Ron Mock, and is made up of him, the CIO and Barbara Zvan, the head of Strategy & Risk. This committee makes sure nobody is gaming their benchmark in any investment activity. (Note: In a subsequent discussion, Barb Zvan told me the head of HR and CFO also sit on this committee and for good reasons).

I asked him why doesn't anyone from the Board sit on this committee and he replied: "The Board approves the benchmarks but it's up to management to make sure they are strictly adhered to in terms of risk. If management doesn't do its job, the Board can change the benchmark and even fire the CEO."

Good point. This person also told me that CPI + 400 or 500 bps is a fine benchmark to use in private markets and most deals aim to ensure CPI + 700 to have an "extra cushion". He added: "Private markets aren't liquid, there is a lot of time and energy involved in deals, so it's ok to want an extra premium over benchmark in deals."

As far as the risk, he stated: "The biggest risk in private market deals is permanent loss of capital but if the compensation is structured over a four or five-year rolling return period, the manager is aligned with the organization's objective not to take excessive risk by gaming the benchmark."

That is an important point, there are no perfect benchmarks in alternative investments, you want pension fund managers to take risk but not to go crazy and risk losing a ton of money on any given year. If the compensation is structured to primarily reward long-term performance, you can do away with a lot of these private markets benchmark gaming issues.

And remember, benchmarks can be gamed everywhere, including public markets and hedge funds, it's not just a private markets problem. If a manager is taking excessive or stupid risks, be it liquidity or leverage or whatever, it should be reflected in their benchmark. Period.
By the way, PSP's Public Markets had net assets under management of $76.7 billion, a decrease of $0.5 billion from fiscal year 2017, and generated investment income of $6.3 billion, for a one-year return of 8.3%, compared to a benchmark of 7.7%.

That 60 basis points of outperformance in Public Markets is decent, nothing extraordinary, but it doesn't tell us whether it comes from portable alpha activities  (ie. swap into a bond index and invest in external hedge funds) or from internal absolute return strategies.

My contacts tell me PSP invests huge sums in big asset managers and hedge funds, writing minimum tickets of $250 million a shot, and they do this because the fund needs scalability to move the needle.

The problem with that strategy is the big hedge funds all focus on the same trades and you risk having concentrated positions that can go against you during a market dislocation.

Also, apparently PSP's Public Markets tried doing Relationship Investing internally, taking large positions in fewer companies, but it didn't go well and the Board wasn't comfortable with the volatility (if true, I think the Board and the Public Markets team need to revisit this activity).

Still, I'm being picky here, there is nothing glaringly wrong at PSP's Public Markets or Private Markets. Overall results fell well short of CPPIB's 11.6% return in fiscal 2018 but they are still solid and above the Policy Portfolio benchmark (remember, you cannot easily compare the performance between two pension funds without understanding asset allocation and risks being taken).

It's also worth noting PSP had a change of leadership late in its fiscal year. In February, André Bourbonnais announced he is leaving to head to BlackRock to work with his old boss, Mark Wiseman, and help Larry Fink beef up private markets there.

Neil Cunningham is more than capable leading PSP during the next five or ten years which I believe will be much tougher than the last ten years including the great recession.

PSP's Board made a great choice in placing Neil as head of PSP. He's smart, solid, experienced and knows that tough times lie straight ahead in both public and private markets. He's also a good leader who wants to leave his footprint on this organization.

If you read his message (pages 16-18), you will see he's very focused on delivering on the strategic plan (click on image):


As you can read, one of the objectives of the strategic plan is Inclusion & Diversity:
"We also launched our Inclusion & Diversity (I&D) Forum in November and initiated an I&D Council, which I co-chair, alongside Giulia Cirillo, Senior Vice President and Chief Human Resources Officer. The Council focuses on creating awareness of our individual unconscious biases and we established several affinity groups to help foster inclusivity at PSP."
I applaud these efforts and prefer the word inclusion over diversity.

In fact, Lindsey Walton, Director, National Programming and Engagement at Women in Capital Markets, posted a Harvard Business Review article on LinkedIn, Diversity Doesn’t Stick Without Inclusion, which made a very valid point:
Part of the problem is that “diversity” and “inclusion” are so often lumped together that they’re assumed to be the same thing. But that’s just not the case. In the context of the workplace, diversity equals representation. Without inclusion, however, the crucial connections that attract diverse talent, encourage their participation, foster innovation, and lead to business growth won’t happen. As noted diversity advocate Vernā Myers puts it, “Diversity is being invited to the party. Inclusion is being asked to dance.”

Numerous studies show that diversity alone doesn’t drive inclusion. In fact, without inclusion there’s often a diversity backlash. Our research on sponsorship and multicultural professionals, for example, shows that although 41% of senior-level African-Americans, 20% of senior-level Asians, and 18% of senior-level Hispanics feel obligated to sponsor employees of the same gender or ethnicity as themselves (for Caucasians the number is 7%), they hesitate to take action. Sponsors of color, especially at the top, are hobbled by the perception of giving special treatment to protégés of color and the concern that protégés might not “make the grade.” The result: Just 18% of Asians, 21% of African-Americans, and 25% of Hispanics step up to sponsorship (and 27% of Caucasians).

Another difficulty in solving the issue is data. It’s easy to measure diversity: It’s a simple matter of headcount. But quantifying feelings of inclusion can be dicey. Understanding that narrative along with the numbers is what really draws the picture for companies.
Said another way, diversity is easy, any bean counter can count how many minorities are hired in any organization but inclusion takes it a step further: Are minorities actively engaged and being given the same opportunities at all levels of the organization? Are there hidden biases we need to examine?

In PSP's case, they've done a great job promoting women to upper management but I did note each of the senior managing directors at the major asset classes (except Public Markets run by Anik Lanthier) is a French Canadian white male.

I have nothing against French or English Canadian white men and I have no doubt all these men are highly qualified for these leadership jobs but I bring this up because a) it's my blog and b) I don't shy away from pointing out stuff that many others have pointed out to me in private conversations and it's time that all of Canada's large pensions realize this country is multiethnic and multicultural and when I see the senior managers at these places (and other large federal Crown corporations), I ask myself where is the representation?

Now, don't send me hate emails blasting me for bringing this up but us Greeks, Italians, Jews, Arabs, Latinos, Chinese, Indians, Africans, Haitians, Lebanese, Iranians, Pakistanis, you name it, we talk among each other and sometimes we openly wonder whether there is discrimination going on at these places, especially in the upper managerial positions. (I know, there is no discrimination, only the best get hired for the top jobs, but even there, people need to be cognizant of the optics).

Anyway, as I told you, there are exceptional women in PSP's senior levels, and that includes Anik Lanthier, SVP Public Markets, Giulia Cirillo (nice Italian name), the head of HR working with Neil on Inclusion & Diversity and Nathalie Bernier, the CFO who won an award for Canada's CFO of the year in 2018:



Good for her, she deserves this recognition and being CFO is a very demanding and important job, especially at PSP.

There are many other senior women like Stéphanie Lachance, VP Responsible Investing who is doing a great job, and Dominique Dionne, VP Public Affairs and Strategic Communications which I follow on Twitter as she posts interesting stuff on PSP, like PSP's new brand and an interview with Patrick Samson, Managing Director of Infrastructure at PSP:





Alright, I'm at the end of my rope, quite literally, and it's time to wrap things up.

I want people to focus their attention on long-term results (click on image):


Importantly, over the past 10 years, PSP Investments has recorded a net annualized rate of return of 7.1%, compared to 5.8% for the Return Objective. "Considering the size and timing of contributions, this outperformance amounts to $23.8 billion in net investment gains above the Return Objective over this 10-year period."

That is the most important measure of success and that's why PSP's senior executives are very well compensated (click on image, from page 69 of annual report):



You need to read the footnotes to understand this table properly and remember, it's mostly based on long-term results (Mr. Garant also received a nice severance package and then joined Gordon at BCI where he's shaking things up in public markets).

Lastly, I did reach out to Neil yesterday to get his feedback and chat about PSP's fiscal 2018 results but he told me he wasn't giving any interviews. It's too bad, maybe next year and Neil, whenever you want, let's grab a lunch together and catch up.

Below, a clip from AIM CROIT explaining what it means to accommodate people with disabilities and why certain myths need to be addressed once and for all. The clip is only available in French but I saw it earlier today and really liked it.

I also embedded a clip where Jim Sinocchi, Head of Disability Inclusion at JPMorgan Chase, explains his theory of the four As in creating an inclusive work environment.

Unfortunately, very few organizations take the plight of people with disabilities seriously when it comes to equal opportunity in employment. It's a national travesty, one that I will keep referring to because it's grossly unjust and it affects me and thousands of others who unlike me don't have a widely read blog as a platform to voice their concerns and frustrations.

I want all the leaders at large organizations reading this blog to ask yourselves: What have you done to engage and recruit people with disabilities and if the answer is "nothing", ask yourself why.

On that note, I congratulate the folks at PSP for another solid year. Get ready, the next five years won't look anything like the last five years, so be prepared for a long, tough slug ahead.



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