USS launches its first asset-backed securities mandate

USS, the UK’s largest private pension scheme by way of assets, has launched its first mandate investing in asset-backed securities (ABS).

Likely to exceed £1bn over the next couple of years, USS’s first ABS mandate will be focused on investment grade, publicly listed securities.

The move comes a little under a year since USS Investment Management (USSIM), the wholly owned investment management arm of USS, appointed Janet Oram to the new role of Head of ABS.

Janet’s appointment underlined USSIM’s commitment to develop its in-house fixed income and treasury capability and support its increasing focus on liability-driven investing (“LDI”). Janet has since been joined by Colin Behar as an ABS portfolio manager, and the team is currently seeking to add an ABS analyst.

Janet said: "It’s an interesting time to be launching a new mandate. Subject to careful analysis, we feel there are likely to be some very good opportunities over the coming months in particular.

"Not only does the ABS market offer an opportunity to broaden the scheme’s investment universe in sterling credit – reducing FX hedging costs – it also creates additional high-grade capacity in a sector that has historically demonstrated strong relative value.

"AAA-rated securities within the mandate will also provide flexibility for collateral management in the LDI book."

Next on the agenda for the team will be a more yield-seeking mandate, partnering with USSIM's inhouse Private Markets team.