USS - Poor performance? - why?

Simes122

I admit, I'm a constant DC value checker - both of my USS pot, and of my HL SIPP - and have been for months while I plot my retirement.   

Why does USS not seem to reflect the performance of the market?  I can look at my HL SIPP (which is a mix of index trackers) and the general rise in the market over Xmas and New Year is reflected.  My USS pot has actually gone down in value.   My SIPP is a 1/10th the size of my USS DC pot, yet regularly outperforms in £ (not %) terms the USS pot, so I'd expect to vastly outperform my HL SIPP in £ terms.  It never seems to.   I appreciate what I'm asking here is complex and dependent on the vagaries of fund selection and so on (I'm in Do It For Me in USS).  However, consistently, I see better growth in my SIPP.   The only time my USS pot 'outperforms' my SIPP is when the market dives! 

Is USS fund management questionable?  Or is that wholly unfair as a general statement?

dunstonh

Why does USS not seem to reflect the performance of the market?

Which market?

 My USS pot has actually gone down in value. 

What are you valuation snapshots as a portfolio of holdings would not be at the December peak currently.  Broadly speaking, you would expect to be marginally down on Mid Decemeber and about the same or lower than in November (depending on how you are invested).  

 My SIPP is a 1/10th the size of my USS DC pot, yet regularly outperforms in £ (not %) terms the USS pot, so I'd expect to vastly outperform my HL SIPP in £ terms.  

Neither the SIPP or the DC pension are performing.    The investments you hold within perform.   You haven't mentioned what you hold in either.    Size is irrelevant to performance (when it comes to investing!!!)

The only time my USS pot 'outperforms' my SIPP is when the market dives! 

The usual answer before you said that is that you are likely invested at different risk levels.  The fact you said that makes it almost certain that is the reason.

If you take a typical 1-10 risk scale and you invest one pension in a portfolio that matches risk 3 and the other in a portfolio that is risk 8 then you would expect returns on the risk 3 portfolio to be consistent with risk 3.   And the returns on the risk 8 portfolio to be consistent with risk 8.      You should not expect risk 3 to give the same as risk 8.

grumiofoundation

Have you actually checked what the USS pot is invested in? 

As said above the performance of  the pensions is based on what they are invested in not the fact they are USS or a SIPP

You can change what your USS pot is invested in easily online (if you want to). 

2nd_time_buyer

I have wondered this too. I think part of it is that the default option is the USS growth fund.

From what I can make out only about 50% of it is invested directly in equities, which is weighted towards UK equities. 

https://www.uss.co.uk/-/media/project/ussmainsite/files/fund-factsheets/growth-fund.pdf

I presume, the low equity percentage, is aimed at de-risking. Which is at the core of the funding "shortfall" in the DB scheme. Whereby assuming a worst case scenario you make it inevitable.

swindiff

As has been mentioned, it depends on what you have your USS DC pension invested in, if you choose the do it for me it is probably in the relatively low risk "Growth Fund", which is up 30% over the last 3 years, so not terrible.

I chose which funds to invest in and went for Emerging Markets - Up 26%, Global Equity - Up 48.5% and Sharia - Up 75%.  These have all dipped in the last month or so due to the general downturn of the markets.

FIREmenow

Are your investments being lifestyled towards the Target Retirement Age?  And if so, is your TRA realistic or just set at the default?  I have recently found the Chair's Defined Contribution statement in the Report & Accounts for 2021 and this is the only place I have seen an explanation of the lifestyling strategy, although still not very detailed.  If you are near your TRA then some of your money could be in the liquidity fund which had near-zero growth in the year to Sept 2021.

The Growth Fund is 80:20 equities:bonds split across over 20 active and passive funds and growth was 1.5% in the three months to Sept 2021, so wasn't doing much growing.  The quarterly report for Q4 2021 doesn't seem to be out yet.



I've found the Chair's statement really helpful to read in understanding the IB, including fees, it starts on page 84 of this pdf if anyone is interested (it is in the public domain): https://www.uss.co.uk/-/media/project/ussmainsite/files/about-us/report-and-accounts/uss-report-and-accounts-2021.pdf?rev=d6745c5b9d414972abfc5229f648400d

Simes122

Thanks folks - sorry I've been slow to come back to this. To answer a couple of questions, yes, I probably worded my question badly and do appreciate it's the market performance that I'm invested in that matters.   My SIPP is in index trackers, (UK, International and US, evenly split), USS in Do it for me.   I suppose what I mean is I'll see a period of growth in general in the markets, and my SIPP reflects that (and the dips).  My USS pot seems to follow the dips, but not the general rises!   I'm also not sure if the £ exchange rate strengths works against me when the £ gets stronger - there seems to be some correlation there.

But yes, I'm actually in Do It for me in USS with TRA set to 58 (I'm 57 now) so appreciate a chunk is in the liquidity fund.   But also a large chunk (far outweighing the value held in my SIPP) is in growth funds (Growth, Moderate and Cautious).  So in cash terms because my USS pot is so much bigger than my SIPP, for a £100 gain there, I'd probably expect to see £500 or so gain in the USS pot (USS Pot is around 10 times the size).  But it's probably a daft rationale because I'm comparing apples and pears.  It feels like my USS DC pot has gone backwards since around October last year, whereas my SIPP has grown overall.  But maybe I've been too cautious in my investing strategy - in hindsight, because I've always been within 5 years of my planned retirement or thereabouts, I've felt Do it for Me felt like the best option.  However, on reflection I should probably have left my TRA to my State Pension age, as I have sufficient DB income and that would have resulted in a more slightly more aggressive Do It For Me profile.  And yes, Sharia looks to have done especially well!  S   

Thrugelmir

The only comparable benchmark is a similar fund over the same time frame.  Time is best spent positioning the portfolio for the future. As what's past is just history now. 

Simes122

All the markets up the last two days - today has been brill everywhere.  My uss pot £750 down.  😬

Thrugelmir

Simes122 said:

All the markets up the last two days - today has been brill everywhere.  My uss pot £750 down.  😬

Your fund valuation is most likely not being updated in real time. 

ussdave

Simes122 said:

All the markets up the last two days - today has been brill everywhere.  My uss pot £750 down.  😬

Mine lost about 8% of it's value in ~mid-Jan.  It's since recovered over 50% of that loss.  This is nearly 100% in the global equities fund.

I don't have many other points of comparison but my small pots in Vanguard LS 100 and HSBC All World seem to have performed similarly meh.