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USS picks Hermes’ Gray as CIO

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  • USS picks Hermes’ Gray as CIO

UK - The Universities Superannuation Scheme (USS) has appointed Roger Gray as chief investment officer. He replaces Peter Moon, who will stay on as a consultant until April 2010, when he retires after 17 years at USS.

Gray was previously CIO at Hermes Investment Management, leaving this June. Before joining Hermes in 2006, he was global head of asset allocation/currency at UBS Brinson, and CIO at Rothschild Asset Management.

Gray was chosen after a global search which resulted in over 100 applications.

The USS - currently the UK's biggest private sector pension scheme, according to the IPE Top 1000 - acts for 378 universities and academic institutions and has 250,000 members.

The scheme ran £23.5bn (€26.8bn) worth of assets as at mid-July 2009. Its portfolio was split 36% in overseas equities, 25% in overseas equities,10.1% in alternatives (7.8% overseas and 2.3% UK), 9.5 % in fixed interest, 7.7% in real estate and 11.3% in cash.

Tom Merchant, chief executive officer at USS, said: "We do not envisage any change in our investment strategy, but we will be placing a greater emphasis on risk."

The scheme has however already been increasing its exposure to alternatives and has a target to grow this allocation to 20% over the medium term. Within this asset class, USS has made sizeable commitments to private equity fund managers and is also making investments directly into private equity transactions. (See earlier IPE article: USS prepares to build FoHFs)

Merchant said: "We see this as a way of reducing our exposure to equities, which are more volatile. This volatility is now more of a problem because if you are in deficit, you have to look at making deficit contributions."

Merchant says the scheme is now around 85% funded on technical provisions. In March 2008, it was just in technical surplus, according to its triennual valuation.

The scheme's assets are run largely in-house, and Merchant said there are no plans to change this arrangement, although if the scheme starts investing in a new asset class it might appoint external managers for that segment of the portfolio.

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