Investment Builder investment performance

Assessing the investment performance of the Investment Builder

An investment balanced scorecard was introduced for the Investment Builder, the defined contribution (DC) part of USS, in January 2023. 2025 was the third year of assessing USSIM’s performance against the DC scorecard.

The balanced scorecard tracks quantitative and qualitative performance. It provides a structured approach to bring together performance across different categories or strands.

Our scorecards allow the Investment Committee to assess the investment and advisory performance of our in-house investment manager, USSIM, independently and holistically.

The scorecard covers six important categories, which are the same as those for the Retirement Income Builder:

Investment return
Investment risk
Active management
Portfolio resilience
Responsible investment
Advice and support

The output of the scorecard is a rating on a scale of Very Good, Good, Average, Poor and Very Poor.

The metrics within it are calculated or overseen by the performance and investment risk teams who are independent from the investment team. They are provided to the Investment Committee, who assess the performance of USSIM against the scorecard each year.

For 2025, the committee acknowledged that USSIM had delivered against most of its objectives and awarded USSIM an overall score of between Average and Good for its investment performance across both the DB and DC investment balanced scorecards, which was on target. In DC, while absolute performance was strong and significantly ahead of the long-term real return targets, USS’s DC fund performance trailed some peers. DC fund performance was, however, stronger than peers on a risk-adjusted basis due to having less reliance on equities than peers.

Below are the metrics used in the DC investment balanced scorecard:

You can also view a plain text version in the accordion below

Note: Where the scorecard contains qualitative self-assessments from USSIM these are clearly identified in the scorecard submission and considered by the IC alongside other sources in forming their overall assessment.

1. Investment return

a. Member realised return versus blended long-term return targets:

i. Younger member (20 years to retirement)

ii. Retiring member (5 years before retirement)

iii. Retired member (at retirement)

b. Fund realised return versus blended long-term return targets (CPI + 3/2/1.5% p.a. for Growth/Moderate/Cautious funds):

i. For Default Lifestyle Growth funds

2. Investment risk

a. Asset risk (asset volatility ex-ante and ex-post):

i. Younger member (20 years to retirement)

ii. Retiring member (5 years before retirement)

iii. Retired member (at retirement)

b. Long-term inflation sensitivity:

i. The allocation to assets with sensitivity to long-term inflation

3. Active management

a. Asset allocation:

i. Default fund returns versus market comparators and peer group

b. Public markets:

i. Aggregate alpha

ii. Aggregate ex-post information ratio of internal and external actively managed mandates

iii. USSIM assessments informed by mandate balanced scorecards

c. Private markets:

i. Aggregate alpha

ii. USSIM assessments informed by mandate balanced scorecards

4. Portfolio resilience

a. Resilience against market events:

i. Maximum drawdown in the Default Lifestyle Growth funds over a rolling 5-year period (ex-post), for sample members as in 1a and 2a

b. Liquidity (KRIs):

i. Capital allocation to illiquid assets as a % of each Default and Ethical Lifestyle Growth fund

5. Responsibility investment

a. Climate risk management:

i. USSIM assessment against its objectives/KPIs

ii. An assessment by the Risk team of how USSIM is delivering vs the Trustee’s net zero ambition (KRI)

iii. An assessment by the Risk team of how USSIM is delivering on managing physical risk (KRI)

b. ESG integration:

i. USSIM assessment against its objectives/KPIs

ii. An assessment by the Risk team of how USSIM is integrating ESG factors (including reporting and stewardship)

6. Advice and support

a. IC assessment of USSIM advice:

i. The IC survey helps to assess the performance of USSIM’s advisory capabilities

ii. A qualitative assessment by the IC based on the advice delivered throughout the year

b. Support provided by USSIM:

i. Support to USS non-executive bodies, members and other stakeholders delivered through the year

c. Product design and innovation:

i. Qualitative external assessment on how the DC investment proposition compares relative to peers

Below you’ll find an analysis of some of the metrics within the DC scorecard that contributed to this rating. All the data is to 31 December 2025 and focuses on the growth funds within our Default Lifestyle Option as this is where most DC assets are invested.

1. Investment return

In this category, we look at the return of our DC growth funds versus their long-term return targets.

All DC funds delivered positive returns over the 12 months to 31 December 2025 and broadly met or outperformed their respective benchmarks over the period, except for the Ethical Equity and Bond Funds.

The performance of the default Growth Funds in the Do It For Me option is set out below.

Investment Builder performance	Fund %	LTRT/ Benchmark %	Fund %	LTRT/ Benchmark %
As at 31 December 2025	1 year		5 year (ann.)
Growth Fund	12.9	6.3	7.7	8.1
Moderate Growth Fund	10.6	5.3	5.6	7.1
Cautious Growth Fund	8.9	4.8	3.2	6.6

2. Investment risk

In this category, we look at investment risk metrics to measure the volatility of our DC funds.

We measure both experienced volatility and expected (or modelled) volatility and set limits on the latter. Experienced volatility is a measure of how much investment returns have moved around. Expected volatility estimates how much volatility might be experienced looking forward, based on a model of returns. The funds remained within the volatility limits throughout the year.

3. Active management

In this category, we assess how USSIM's actively managed mandates have performed compared to market comparators.

The Investment Committee felt that active management was not at the level achieved in other scorecard categories.

Our external DC investment adviser compared the USS Growth Fund against 20 UK DC master trust default growth fund returns over the 12 months to 31 December 2025. The USS Growth Fund ranked 4th out of 20 peers on a risk-adjusted basis.

Our globally diversified portfolio looks to spread investment risk across a variety of factors and the USS Growth Fund is therefore invested in a number of different asset classes including equities, property, infrastructure and bonds. As a result of this diversification, its performance was behind some less diversified, more equity-reliant peer funds. The fund has outperformed its long-term return target over longer time periods (since inception). We believe that using a long-term return target is in the best financial interests of our members as it allows them to see how their Investment Builder savings are performing relative to inflation over the long term.

The three scorecard categories below are more qualitative assessments. We have therefore provided some commentary on how USSIM has been measured.

4. Portfolio resilience

In this category, we assess our growth funds’ resilience over time.

As we mention above, our diversified portfolio looks to spread investment risk across a variety of factors and regions. We measure how much this diversification contributes to reducing volatility in returns for the growth funds.

We also measure the biggest fall in the value of members’ DC savings from its peak to its trough over a given period, to see how resilient the funds have been. Holding a diverse portfolio should help to reduce the likelihood of experiencing large short-term losses. Positive outcomes in portfolio resilience were acknowledged by the committee.

5. Responsible investment

In this category, we assess USSIM’s climate risk management and its integration of wider environmental, social and governance (ESG) risks into its investment decision-making.

The scorecard therefore provides a framework for integrating financially material ESG factors into our governance. These issues are important in the assessment of USSIM’s performance and factored in, in a systematic way, under the investment balanced scorecard approach.

The committee highlighted that strong progress was made on responsible investment, especially the integration of responsible investment considerations across the wider portfolio, positive recognition from The Pensions Regulator for our TCFD Report 2025, and the delivery of the Trex paper. However, it noted there is still more to do on the integration of physical risk under the climate scenario analysis work.

6. Advice and support

In this category, we assess the quality of the investment advice provided by USSIM.

USSIM provides investment advice to the Investment Committee on a range of issues. The Investment Committee meets regularly to consider investment issues on behalf of the Trustee.

The committee highlighted the high quality of investment support and advice provided during the year, while noting opportunities for more proactive advice in relation to the equities strategy, and performance drivers for complex mandates.

Further information

View our Report and Accounts for more information on our investment performance.

Report and Accounts

Investment Builder investment performance

Assessing the investment performance of the Investment Builder

Below are the metrics used in the DC investment balanced scorecard:

The metrics used in the DC investment balanced scorecard (Text version of above graphic)

1. Investment return

2. Investment risk

3. Active management

4. Portfolio resilience

5. Responsible investment

6. Advice and support

Further information