Responsible Funds, August 10: USS reviewing how it runs its DC assets

Universities Superannuation Scheme (USS), the £60bn (€66.8bn) pension scheme for UK academics, is rethinking how it runs its defined contribution assets. According to its new annual accounts, it said it is “reviewing opportunities to leverage the scale and the internal team’s specialist skills deployed in DB (defined benefit) into the DC (defined contribution) investments”. USS currently operates a hybrid scheme where members are automatically enrolled in an internally managed DB scheme, which make up 77% of the entire pension scheme. Members’ earnings over a specified salary threshold are funnelled into a separate, externally managed DC element, which provide members more autonomy over their investments. A USS spokesperson told RI: “There may be something we can talk about in a few months time, although that’s far from certain”.

Investment in the Southeast Asian financial services, energy and manufacturing sectors is driving a dynamic and expanding impact investment market in the region, according to a new report. The Global Impact Investing Network (GIIN) report – the first in-depth analysis of the impact investing market – found that over 80% of total capital deployed went towards these three sectors. Education, healthcare and workforce development, though, are attracting increasing interest, Investment activity has increased significantly in recent years, according to the report, with private investors deployed $904m (€789m), and Development Finance Institutions $11.3bn (€9.9bn), since 2007.

Daiwa Securities Group and GI Capital Management have set up a ¥5bn (€39m) fund to invest in large-scale solar projects in Japan. The launch of the Daiwa GI Green Fund forms part of Daiwa’s wider expansion into the renewable energy sector. The ¥67trn (€526bn) AUM Japanese investment bank has said its interest in the fund will be transferred to the Daiwa Energy & Infrastructure Co, which it created last month to boost its energy and infrastructure assets.

Foresight Solar Fund Ltd. has boosted its solar photovoltaic portfolio with the acquisition of 15 operational UK solar assets. The £47m acquisition will be funded by the proceeds of an oversubscribed (£48.1m) fundraise completed last month. Foresight plans to refinance the 114MW portfolio, which currently has £107m debt facilities provided by RBS.

Puget Sound Energy, Washington state’s largest power utility, has welcomed a new wave of investment from pensions and retirement fund managers. New investors Canadian DB pension plan OMERS and Dutch pension fund manager PGGM will take 23.9% and 10% stakes, respectively. Increasing their positions are Alberta Investment Management Corporation (AIMCo) – to 13.6%, and British Columbia Investment Management Corporation (BCI) – to 20.9%. Canada Pension Plan Investment Board (CPPIB), an investor since 2009, continues its 31.6 percent position.The NEST Sharia fund has emerged as the best performing fund offered by the £3.4bn (€3.8bn) UK workplace scheme, according to a new investment update. Cumulative performance of the equities-only fund, which is benchmarked against the NEST Islamic Titans Index and screened by Islamic scholars to meet Sharia standards, is up 13.5% since launch in 2011. Over the one-year view it has returned 12.0%. The NEST Ethical Fund is up 11.2% since launch (compared to the CPI+3% benchmark return of 4.9%) and up 8.7% over a year (benchmark: 5.5%). NEST, which has 6.9m members, reports in line with the Taskforce for Climate-related Financial Disclosures.

US renewables investor Hannon Armstrong Sustainable Infrastructure Capital has signed the UN Global Compact (UNGC) – the world’s largest voluntary corporate sustainability initiative. The firm will report its annual progress on all ten of the UNGC’s principles, which focus on human rights, environment, and anti-corruption in support of the SDGs.

BMO’s F&C UK Property Fund has received accreditation as a Living Wage Employer, in what it says is a first for a fund. The accreditation came after the fund reviewed and intervened where necessary in its contracts to ensure all third party employees were receiving the real living wage – £10.20 in London and £8.75 across the rest of the UK. The funds says the change will have a positive impact on those who are traditionally underpaid, such as cleaners and security staff.

BMO Asset Management is closing the £13.39m F&C Global Bond fund due to waning assets. Launched in 1981, the fund has been managed by global rates team fund manager Sujay Shah since 2014. Media reports have noted that Shah is shown to be performing worse than his peer group on FE’s Trustnet manager fact sheet.

Private equity giants TPG and KKR & Co. are leading contenders to manage Abraaj’s turbulent $1bn healthcare fund, according to a report by Reuters. Turmoil was prompted at Abraaj, the Middle East’s largest private equity house, when investors in the fund began questioning how it was using some of its money. Abraaj has denied it misused the funds. Offers from TPG and KKR are expected within weeks.. They both declined to comment.

Non-profit asset manager Impact Shares is working with the US National Association for the Advancement of Coloured People to launch a Minority Empowerment Exchange-Traded Fund. The fund began trading on the New York Stock Exchange last week.