The Alternative Assets programme began in 2007 with a mandate to allocate 20% of the Fund’s assets into alternatives.
Alternative assets include:
- Private Equity
- Absolute Return Strategies including hedge funds
- Infrastructure
- Timberland
The current allocation to alternatives now represents around 16% of the total Fund or approximately £5.0 billion in invested capital. The chart below illustrates the current allocation of the alternatives portfolio.
This allocation changes over time reflecting our opportunistic approach to allocating capital within alternatives. For example, the allocation to Absolute Return Strategies is expected to increase materially over the medium term in response to the opportunities we expect within that asset class.
The vast majority of our investments are directly into funds with very little exposure to fund of fund managers. The one exception is our strategic partnership with Constitution Capital Partners who manage a US mid-market private equity programme for USS.
Alongside our fund investments, USS is also building a dedicated co-investment capability to invest directly into companies alongside our managers and other like-minded investors.
This approach to managing the Alternative Assets programme is founded upon building the internal capability and expertise. The alternatives team currently has 15 dedicated professionals and will continue to expand over the next 12 months.