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Our investment performance

Take a look at how the funds have performed

Two parts to USS

There are two parts to USS. The Retirement Income Builder is the defined benefit (DB) part, which provides a guaranteed income in retirement. The Investment Builder is the defined contribution (DC) part, which allows you to save more towards your future in your own savings pot.

Both parts are invested in much the same way and aim to meet the objectives set under our investment balanced scorecards. One difference is that our Investment Builder funds are mostly managed by external investment managers, rather than internally. We also choose the assets, and monitor their return and risk levels in similar ways.

Our investment performance

To help us measure how well we’re doing, we use what’s called an investment balanced scorecard. This takes a balanced view of investment performance against the backdrop of our investment objectives and the interests of our members and employers.

The scorecard covers six important categories that are assessed by our Investment Committee. This includes things like the return on our assets, the way investment risk is managed, the value our in-house investment team can add, and our Responsible Investment ambitions.

The output of the scorecard is a rating on a scale of Very Good, Good, Average, Poor and Very Poor. To see the full scorecard, visit how we manage the funds.

“Balanced scorecards are consistent with systems thinking in moving towards a model of integrated thinking that is stronger than the classic ‘management by objectives’ model and ‘objectives and key results’ model, with more attention given to overall goals, context and behavioural alignment... USS practice is leading edge in developing the balanced scorecard.”

Roger Urwin FIA FSIP, Global Head of Investment Content, Investment Consulting, Willis Towers Watson.

In 2022, we scored Better than Good for performance across the DB and DC investment balanced scorecards. This has been a challenging year for financial markets with rising inflation and interest rates causing almost all asset prices to fall. However, our experienced in-house investment team was able to navigate the turmoil well, with the scheme ending the year in a strong position.

See how both parts of USS have performed below. Or you can find more information in our Report and Accounts.

Retirement Income Builder (DB)

The 12 months to 31 March 2023 saw high volatility in investment returns and a huge shift in dynamics. This has ultimately impacted the value of the fund, which fell to £73.1bn due to the decline in market value in most asset classes. However, the estimated value of USS’s liabilities (the amount we need to pay out in pensions in the future) has fallen by materially more than the assets. This means our funding position has ultimately improved.

The Investment Committee gave a score of Better than Good for the Retirement Income Builder. The committee called out our positive handling of the turbulence seen in the gilt market, strong active management, the excellent performance of our private market assets, strong investment advice, the improved funding position, and the way risk was managed overall.

You can find an analysis of some of the metrics within the DB scorecard that contributed to this score on our investment performance page for the Retirement Income Builder.

A strong long-term performance

Although the market value of the scheme’s investments fell in the financial year, the scheme significantly outperformed the Liability Proxy (by 8.4% per annum) over the five years to March 2023. It also outperformed the Liability Proxy over 10 years (by 5.5% per annum). This recent improvement has been largely driven by changes in the market and rising interest rates.

Investment Builder (DC)

Like the Retirement Income Builder, returns for the Investment Builder funds over the 12 months to 31 March 2023 were buffeted by markets that were particularly volatile. The Investment Committee gave a score of Average to Good for the Investment Builder.

2022 wasn’t an easy year for DC investments across the industry, with returns that were negative across the board and very high inflation-related targets. However, when our DC investment advisor reviewed the USS Growth Fund against 16 UK DC master trusts, our diversified portfolios performed better than almost all those peer DC funds. This outperformance over the year was driven, primarily, by the strategy’s allocation to private market assets.

In January 2023, we moved the USS Growth Fund from a market comparator benchmark to a long-term return target (LTRT), which targets inflation +3% each year. This allows you to see how your Investment Builder savings are performing relative to inflation over the long-term. Recent turbulent investment markets against a backdrop of high inflation have meant that the one year performance of the fund is lower than the LTRT. But looking over a longer time horizon the fund return since inception is in line with the target.

See the performance of each fund within the Investment Builder below over one year to 31 March 2023, against a long-term return target (LTRT) or benchmark.

1 Year 5 Year
Funds
Fund
LTRT/Benchmark
Fund
LTRT/Benchmark
Growth fund
-0.9%
13.1%
5.8%
7.2%
Moderate Growth Fund
-2.6%
12.1%
4.49%
6.2%
Cautious Growth Fund
-4.9%
11.6%
2.8%
5.7%
Liquidity Fund
2.3%
2.3%
0.8%
0.7%
Global Equity Fund
-0.4%
-0.2%
10.5%
10.2%
Emerging Markets Equity Fund
-6.1%
-4.9%
2.4%
2.1%
UK Equity Fund
3.2%
2.4%
4.5%
5.3%
Ethical Equity Fund
-4.7%
-1.0%
11.7%
11.1%
Bond Fund
-5.7%
-5.1%
0.3%
0.7%
Sharia Fund
-2.7%
-2.9%
15.1%
15.2%
Ethical Growth Fund
-5.7%
13.1%
7.9%
7.2%
Ethical Moderate Growth Fund
-6.9%
12.1%
5.4%
6.2%
Ethical Cautious Growth Fund
-7.9%
11.6%
3.5%
5.7%
Ethical Liquidity Fund
2.3%
2.3%
0.8%
0.7%

You can find a more in-depth look at each fund and their performance in the Quarterly Investment Report for the Investment Builder.