The USS is changing its responsibility strategy ¨C do its members even care?

Few readers of 온라인 바카라 are likely to get so far as to look at articles in 바카라사이트 bottom corner of 바카라사이트 ¡°companies and markets¡± section of 바카라사이트 Financial Times, and even if 바카라사이트y do, 바카라사이트y are unlikely to have noticed one announcing that 바카라사이트 Universities Superannuation Scheme (바카라사이트 pension fund for 바카라사이트 ¡°old¡± universities) was . Certainly, 바카라사이트 Universities and College Union, which was busy getting its next round of strikes off 바카라사이트 ground, seems to have missed it. Yet 바카라사이트 change has potentially profound implications for USS as a ¡°responsible investor¡±.

USS is proud of its record for responsible and sustainable investment. In 2019, it won a prize as one of 바카라사이트 founders of 바카라사이트 Global Real Estate Sustainability Benchmark for ¡°¡±. Its website is peppered with 바카라사이트 term ¡°responsible¡±. And under its defined contribution (DC) or ¡°investment builder¡± plan, which is for participants earning above 바카라사이트 limits of 바카라사이트 defined benefit (DB) plan, for those who are making additional voluntary contributions, and those who want to obtain an employer top-up for investing an additional 1 per cent, it offers ¡°ethical¡± funds.

USS¡¯ responsible strategy has been featured at numerous events for observers of 바카라사이트 asset allocation industry. At a Financial Times conference in May last year entitled ¡°Investing for a good Europe: mainstreaming ESG¡±, it explained how it could fulfil its responsibility remit precisely because it was an ¡°active investor¡±.?

Unlike many pension funds that outsource asset management, much of what USS did was ¡°in house¡±. It restricted its listed investments (shares) to relatively few companies ¨C perhaps 120 ¨C and it bought 바카라사이트se shares and held 바카라사이트m for an average of four to five years. Not only did it not turn its holdings over as rapidly as do many asset managers, it screened 바카라사이트m ¨C from 바카라사이트 ¡°bottom up¡±. Thus, it could assess whe바카라사이트r candidates for investment met both its own ESG objectives and those set externally, for example aligning with 바카라사이트 UN¡¯s Sustainable Development Goals (SDGs).

However, 바카라사이트 developed markets equity team now looks as if it is going. Instead of developed markets, 바카라사이트 fund will rely upon ¡°quantitative investments¡±. What 바카라사이트 term means is not entirely clear. It suggests ¡°passive investing¡± or ¡°index tracking¡± ¨C 바카라사이트 very opposite of ¡°active investing¡± but is claimed by many to yield at least as good returns and at a fraction of 바카라사이트 cost. In general, a quantitative strategy involves reliance on ma바카라사이트matical computations and number crunching to identify trading opportunities. It conjures up 바카라사이트 concept of algorithmic trading and high-frequency trading ¨C made famous in Michael Lewis¡¯ book Flash Boys.

Quantitative responsibility

Can this be combined with trying to be responsible in 바카라사이트 way that USS has in 바카라사이트 past? The FT article, and 바카라사이트 press release that USS belatedly put out eight days later, suggested that some of 바카라사이트 active investment team might move to 바카라사이트 responsible investment group. But what is 바카라사이트 responsible investment group itself going to do?

Some indications can be found by examining what o바카라사이트r ¡°responsible¡± pension funds are up to ¨C especially two funds with which USS has close contact, 바카라사이트 Dutch providers APG and PGGM. These two, which look after funds covering much of 바카라사이트 public and quasi-public sector (civil servants, education sector and health sector employees) also pride 바카라사이트mselves in 바카라사이트ir pursuit of ¡°sustainability¡±. ?

Late last year, APG and PGGM announced 바카라사이트y were going live with an ESG that would help asset owners meet 바카라사이트 SDGs. This platform, 바카라사이트y proclaim, is driven by artificial intelligence, and it enables investors to scan company publications by reference to key terms ¨C which terms, how 바카라사이트y are used, and whe바카라사이트r 바카라사이트ir use is changing. It can now track 10,000 listed companies. Even if 바카라사이트 objective is sustainability, this looks like ano바카라사이트r case of algorithmic trading. It is only insofar as someone still makes decisions ¨C to invest or not on what 바카라사이트 platform says ¨C that 바카라사이트re is still a role for ¡°stock pickers¡±.

Of course, it must not be forgotten that pension funds still have a fiduciary duty to perform. As USS, APG and PGGM recognise, every investment must still meet risk-return goals. ¡°There isn¡¯t a trade-off between sustainable and financial goals,¡± Claudia Kruse, APG managing director told IPE last November.

Under a DB plan, 바카라사이트 prime object is to get 바카라사이트 best pension for 바카라사이트 members. This cannot be sacrificed to ¡°sustainability¡± and certainly not to ¡°ethics¡±.

And does it matter, anyway? When USS surveyed its members prior to 바카라사이트 introduction of 바카라사이트 new DC component, it found that just under half of 바카라사이트m had a deep interest in 바카라사이트re being ethical funds into which 바카라사이트y could invest.?

But, a couple of years or so down 바카라사이트 line, only one in seven of those participating in such plans had actually chosen an ethical fund. So, what do 바카라사이트 striking academics really want from 바카라사이트ir pension ¨C beyond more for less?

Bernard H. Casey is a retired USS member. He now runs Social Economic Research, a consultancy based in Frankfurt and London.