USS launches its first asset-backed securities mandate

Universities Superannuation Scheme (USS) has launched its first mandate investing in asset-backed securities (ABS).

The scheme stated that the mandate was likely to exceed £1bn over “the next couple of years”.

Its first mandate will be focused on investment-grade, publicly listed securities.

The move come just under a year since USS’s wholly owned investment management arm, USS Investment Management (USSIM), appointed Janet Oram as its head of ABS.

USS said that Oram’s appointment underlined USSIM’s commitment to developing its in-house fixed income and treasury capability, and supporting its increasing focus on liability-driven investing.

“It’s an interesting time to be launching a new mandate,” commented Oram.

“Subject to careful analysis, we feel there are likely to be some very good opportunities over the coming months in particular.

“Not only does the ABS market offer an opportunity to broaden the scheme’s investment universe in sterling credit – reducing FX 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.”

Following this mandate launch, USS will partner with USSIM’s in-house private markets team in seeking a more yield-seeking mandate.

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