Our investment performance

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.

The value of the DB fund increased by £1.7bn over the year to 31 March 2024. Equity markets across the globe performed strongly over the period despite ongoing inflation concerns. While credit markets displayed positive performance over the year, the rising interest rate environment proved to be a drag on government bonds. However, the estimated value of USS’s DB liabilities continued to fall materially, improving the funding position.

Retirement Income Builder (DB)

The defined benefit (DB) fund stood at £74.8bn against estimated liabilities of £65.6bn, based on monitoring of the 2023 valuation – giving an estimated Technical Provisions surplus, at 31 March 2024, of £9.2bn (114% funded). This means our funding position has ultimately improved.

The Investment Committee gave a score of Good for the Retirement Income Builder. The committee called out our high-quality investment advice, distinct and clear progress on responsible investment and well managed counterparty risk. USSIM also increased the number of counterparties and the range of collateral that could be used across a variety of financial instruments to diversify and manage risk.

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

The scheme significantly outperformed the Liability Proxy (by 10.8% per annum) over the five years to March 2024 and has outperformed the Liability Proxy over 10 years (by 5.6% per annum).

Investment Builder (DC)

The Investment Committee gave a score of Good for the Investment Builder. You can find an analysis of some of the metrics within the DC scorecard that contributed to this score on our investment performance page for the Investment Builder. Unlike last year, this was a more favourable year for DC investments across the industry, with returns being positive across the board. The scheme’s DC funds recorded strong returns over the 12 months to 31 March 2024, with the growth funds within the Do It For Me Option all exceeding their objectives. Most of the Let Me Do It funds matched or outperformed their respective benchmarks over the period, with the exception of the Ethical Equity Fund.

See the performance of each fund within the Investment Builder below over one year to 31 March 2024, against a long-term return target (LTRT) or benchmark.

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