The investment arm of the UK’s Universities Superannuation Scheme (USS) is to close its internal developed markets equities team as part of a shift away from traditional stock-picking in these markets to an approach more focussed on the impact of environmental, social and other long-term factors.
Thirteen roles will be at risk of redundancy as a result of the move, with the possibility of redeployment to other teams for some of the affected employees.
Simon Pilcher, CEO of USS Investment Management since last autumn, said: “This change is about focussing our internal investment capabilities on where we can add the most value, given the returns we need to generate for members.
“Longer-term strategic themes, particularly in the responsible investment space, are growing in importance to investors like ourselves and through this we will reshape the portfolio to best adapt to future challenges.”
BlackRock has been appointed as transition manager for the £14bn (€16.8bn) developed market equities portfolio.
The USS investment subsidiary said there would be no change to the investment objectives, asset allocations or outperformance targets for the scheme as a result of the change, and the teams responsible for global emerging market equities, quantitative analysis and responsible investment would also be unaffected.
It also said the move to the new approach was not “any reflection on the performance of equities, which was very strong in 2019”.
It reserved the right to focus on stock selection “in those areas where there are long-term structural opportunities to do so” and said a strong responsible investment overlay would be applied to these areas to ensure a consistent view across markets and assets classes.
The change comes as a dispute ranges on between USS members and sponsoring employers over the financing of higher costs of meeting benefits.