USS - Poor performance? - why?

Albermarle

Simes122 said:

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   

When you talk about the market , you seem to be only talking about equity markets. This makes sense for your HL SIPP as it is 100% equities.
However the TRA fund in USS is probably mainly bonds . Bonds have been struggling in recent months and this is probably why you are seeing poor performance. If the equity markets were to really drop , then the TRA funds would hold up better than the HL ones and for many people on the cusp of retirement that would be a good outcome.

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. 
You are probably right 

swindiff

I have been quite happy with the funds I am invested in.  OK, Emerging markets is doing pretty badly but that only makes up about 20% of my Investment builder.

1 Year performance


3 Year performance

dunstonh

I have been quite happy with the funds I am invested in.  OK, Emerging markets is doing pretty badly but that only makes up about 20% of my Investment builder.

20% in emerging markets is high unless you are a very high risk investor.

swindiff

I am still a little way off from retirement and the Investment Builder is the DC part of my USS pension.  So I have my DB part to give me most of my security.  My plan is it to see if Emerging Markets recover a bit in 2024, as seems to be anticipated from what I have read online? and then transfer it to the other funds.  Does that seem like a sensible plan?

Linton

As has been said EM is high risk. Also, depending on its structure, the Shariah fund may be pretty high risk as Shariah index funds have a very high allocation to the Technology sector. Furthermore investing on the basis of what you think will perform well has a good chance of being unsuccessful.  Finally investing in equity with a time frame of 1 year is high risk in itself. Normal market volatility could well lead to a loss, even if one ignores the risk of the EM and Shariah funds.

So  no, I do not think that what you are proposing is a sensible plan. Why not go for your chosen future allocation now?

swindiff

My other funds are Sharia and Global equities, so if I were to move it, it would be to those funds which have performed very well.  Yes I know past performance is no guarantee of future performance but could have invested it all in the low risk bond or liquidity funds and have half what I have in my current pot.  Also I have been invested in EM for several years now so it is not really a 1 year timeframe.



Liquidity and Bond funds are the only ones that are considered "low risk".  Inflation would be eating away at my pot in these "low risk" funds

MPLMPL

Just a comment on holding the Emerging Markets Fund as a stand alone fund in order to have some exposure to emerging markets. Several years ago, I used to allocate something like 5-10% of my Investment Builder to the Emerging Markets fund until I realised that the Global Equity Fund (which I also held/hold) already comprises 8% Emerging Markets (Benchmark for USS Global Equity Fund is MSCI World Index (92%), MSCI Emerging Markets Index (8%)). On spotting this, I switched to 100% Global Equity Fund. Not a recommendation, just in case you haven't looked under the bonnet.

2nd_time_buyer

MPLMPL said:

Just a comment on holding the Emerging Markets Fund as a stand alone fund in order to have some exposure to emerging markets. Several years ago, I used to allocate something like 5-10% of my Investment Builder to the Emerging Markets fund until I realised that the Global Equity Fund (which I also held/hold) already comprises 8% Emerging Markets (Benchmark for USS Global Equity Fund is MSCI World Index (92%), MSCI Emerging Markets Index (8%)). On spotting this, I switched to 100% Global Equity Fund. Not a recommendation, just in case you haven't looked under the bonnet.

I did exactly exactly the same and have switched to the USS Global Equity Fund, and have generally found it less worrisome. 

However, recently I was wondering whether the Global Funds disproportionately favor bigger companies? i.e. do they just include the biggest stocks in each of the territories. If so, is there the potentially to be artificially high, as the same stocks will be included in all the global funds by default?

MPLMPL

2nd_time_buyer said:

However, recently I was wondering whether the Global Funds disproportionately favor bigger companies? i.e. do they just include the biggest stocks in each of the territories. If so, is there the potentially to be artificially high, as the same stocks will be included in all the global funds by default?

Not sure what you mean? Stocks will appear in the index of countries in which they are listed?  
From MSCI "The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries*. With 1,480 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country."
The index is weighted by country, so from the MSCI Dec 2023 factsheet, the USA comprises nearly 70% of the index, so the biggies in the USA Amazon, Apple, Microsoft, Alphabet, Nvidia etc. make up a lot of the index. Is this what you mean? Approx 10 companies accounting for ~20% of the index.

2nd_time_buyer

MPLMPL said:

2nd_time_buyer said:

However, recently I was wondering whether the Global Funds disproportionately favor bigger companies? i.e. do they just include the biggest stocks in each of the territories. If so, is there the potentially to be artificially high, as the same stocks will be included in all the global funds by default?

Not sure what you mean? Stocks will appear in the index of countries in which they are listed?  
From MSCI "The MSCI World Index captures large and mid-cap representation across 23 Developed Markets (DM) countries*. With 1,480 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country."
The index is weighted by country, so from the MSCI Dec 2023 factsheet, the USA comprises nearly 70% of the index, so the biggies in the USA Amazon, Apple, Microsoft, Alphabet, Nvidia etc. make up a lot of the index. Is this what you mean? Approx 10 companies accounting for ~20% of the index.

Yes, sorry I was a bit garbled. The " Approx. 10 companies accounting for ~20% of the index." is the bit that makes me feel uncomfortable.

It seems, that with the increasing use of trackers, there is the potential for the value of these top companies to be blindly inflated by the fact they have high a value, which feels a bit bubbly.