From 2 January 2023, the USS Growth funds, which make up part of the Default and Ethical Lifestyle Options, the Do It For Me Option, and which members can choose in the Let Me Do It Option, will have a long-term return target above the Consumer Price Index (CPI) measure of inflation, instead of an objective and benchmark based on a market comparator.
You’ll be able to see how your Investment Builder savings are performing relative to inflation, giving you a clearer view of how your pot is doing relative to the cost of living. For the avoidance of doubt, only the funds listed below are changing.
See how we do it now, and how it will change.
| Fund | Until 1 January 2023: Objective | Until 1 January 2023: Benchmark | From 2 January 2023: Long-term return target (replaces the objective and benchmark) |
|
USS Growth Fund and USS Ethical Growth Fund
|
Aims to produce a nominal return* per year between 4-8% over the long term
|
80% global equity/20% global bond (hedged) comparator
|
Aims to produce a CPI+ 3.0% per year return over the long term
|
|
USS Moderate Growth Fund and USS Ethical Moderate Growth Fund
|
Aims to produce a nominal return* between 3-6% per year over the long term
|
60% global equity/40% global bond (hedged) comparator
|
Aims to produce a CPI+ 2.0% per year return over the long term
|
|
USS Cautious Growth Fund and USS Ethical Cautious Growth Fund
|
Aims to produce a nominal return* between 2-4% per year over the long term
|
40% global equity/60% global bond (hedged) comparator
|
Aims to produce a CPI+ 1.5% per year return over the long term
|
*Nominal return is the amount of return generated by an investment before factoring in the impact of inflation.
So, if CPI inflation over a 10-year time horizon is 4% per year, the long-term return target for the USS Growth Fund and USS Ethical Growth Fund for the same period would be 7% per year. For the USS Growth Fund and USS Ethical Growth Fund, the long-term return target would be 6% per year, and for the USS Cautious Growth Fund and USS Ethical Cautious Growth Fund, it would be 5.5% per year.
This change will not impact the risk profile and investment characteristics of the respective funds.
You can take a more in-depth look at the Investment Builder funds and their performance in the Quarterly Investment Report for the Investment Builder.
Published: 15 November 2022
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