On the go: The £90bn Universities Superannuation Scheme has launched an in-house mandate to invest in asset-backed securities.
The scheme is looking to allocate more than £1bn to the asset class over the next couple of years, it said.
The mandate will focus on publicly listed investment-grade securities. The move is part of the USS’s efforts to develop its in-house fixed income capability, as well as support an “increasing focus on liability-driven investing”, the scheme added.
“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,” USS head of ABS Janet Oram commented.
“Not only does the ABS market offer an opportunity to broaden the scheme’s investment universe in sterling credit — reducing [foreign exchange] 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.”
Last year, USS’s head of fixed income Ben Clissold told Pensions Expert’s sister title MandateWire that ABS are a “core credit-type asset that you would expect a UK pension scheme to be investing in”, as it gives “relatively attractive returns at relatively low risk”.
The ABS team will now start working on a more yield-seeking mandate, in partnership with the scheme’s private markets in-house team.
This article first appeared on MandateWire.com
