USS awards E5.6bn to Wellington, Goldman and L&G
UK – The 19 billion-pound (28 billion-euro) Universities Superannuation Scheme has appointed Wellington, Goldman Sachs and Legal & General and dropped Schroders, Baillie Gifford and Merrill Lynch.
The total value of the assets awarded is 3.8 billion pounds (5.6 billion euros).
“This follows a review of investment strategy and a decision to move away from balanced fund managers,” the scheme said in a statement.
“As a result, three current external managers, Schroders, Baillie Gifford and Merrill Lynch Investment Managers are no longer included in the external roster of managers.” It said its portfolio reorganisation is now complete.
Wellington Management, Goldman Sachs Asset Management and Legal & General Investment Management would run global equities, UK equities and active bonds respectively.
The Wellington mandate is worth 1.9 billion pounds, while Goldman and L&G will each run 950 million pounds, said the scheme’s chief investment officer Peter Moon. The rejig was part of the scheme’s five-yearly review.
He added the scheme had used a transition manager, though he declined to name them. Custody for the external assets remains with State Street.
USS manages 70% of its assets in house and now has a total of five external fund managers instead of the previous three.
“We have enjoyed a long and successful relationship with USS and are naturally disappointed that the relationship is ending,” said Baillie Gifford partner Nigel Morecroft.
“We are pleased to note, however, that they had no issues with Baillie Gifford regarding investment performance or service levels.
He said the firm won 3.8 billion pounds in 2003 that it had more than 1 billion pounds of unfunded business from new UK pension fund clients at the start of this year.
Schroders spokesman Julian Samways said that the revenue impact on the company was considerably less than the size of assets would imply as the balanced business operates on a lower margin than the specialist. He declined to disclose the amount of assets lost.
MLIM declined to comment.