Private Equity and Infrastructure: Expanding PEPP’s Investment Landscape

Submitted by PEBA on December 14, 2020
Category

Private Equity

The Public Employees Pension Plan (PEPP) is excited to announce that it has begun investing in two new asset classes: private equity and infrastructure! Investing in private equity and infrastructure allows PEPP to offer greater investment diversity, and makes it one of the first Defined Contribution (DC) plans in Canada to include private markets in their investment strategy.

Private equity investments are made up of investments that are not listed on a public stock exchange, consisting of private companies anywhere in the economy from technology to media to industrial or healthcare. Infrastructure investments are a subset of private equity, and are made up of physical infrastructure such as airports, seaports, power generation or transmission, or telecommunications.

What makes these investments different from other investments in your pension plan? Private equity and infrastructure are long-term investments. Once PEPP has chosen a manager to invest with, they commit to funding and gaining returns from that investment for approximately 10 years.

Private EquityYou may be wondering why a pension plan would want to lock-up portions of their investments for such a long period of time. Although private markets do require funds to be invested long-term, they also provide the potential for larger risk-adjusted returns in addition to diversifying sources of risk and return. The lock-in period is necessary as it can take a few years for investment managers to properly execute their plans and yield positive results – the larger returns we typically see in these asset classes.  

What is even more exciting about PEPP being involved in private equity and infrastructure investing is that we are one of the first DC plans to develop a strategy for investments like this in Canada. PEPP has always been an innovative DC plan, and we are excited to offer this new asset class with your investments.

PEPP made its first contribution to infrastructure in August 2020. Due to the fact that these investments occur over a longer period than most, the funding for this asset class is expected to be gradual over the next few years. Our Fund Fact sheets under the Investment Publication section of our website will be updated every year to show the progression of PEPP’s investments in all of our asset classes, including private equity and infrastructure.  

Over the coming months you should expect to see more communication through our blog, social media, and quarterly newsletter about the benefits of these asset classes, how PEPP is choosing to invest, and why we chose to start investing now.

If you would like to see a complete list of PEPP’s current investment fund managers, you can find it under Investment Publication section of our website. The Investment Publication section also has an Investments Glossary under resources on the right-hand side.

Wanting to know more about your specific investments or how this new investment strategy will affect your account? Reach out to one of our Retirement Information Consultants at 306-787-3170.

 

 

 

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