USS invests $200m in Partners Group

USS makes a $200 million (€149 million) investment in Partners Group’s new hedge fund of funds strategy that is being replicated by other large financial houses.

The £30 billion (€42 billion; $59 billion) UK pension fund, Universities Superannuation Scheme (USS), has made one of its first investments into alternative assets.

Swiss-based alternative asset manager Partners Group will invest the $200 million sum in its $1 billion alternative beta strategies programme. A spokesman said other blue chip investors had invested but USS was the first to have announced its investment in the new programme.

Partners Group said their hedge fund investment vehicle was complicated but offered greater transparency and liquidity than other fund of funds models. Its 1.5 percent annual fee and 15 percent share in profits compares favourably to the traditional 2/20 Cayman Island model according to partner Urs Wielisbach.

The firm started the alternative beta strategy in 2004 and since then the model has been replicated by Goldman Sachs and Merrill Lynch amongst others he said.

The USS committee has decided to invest up to 5 percent of its total assets in alternative investments by 2008 and up to 20 percent in the medium term.

Typically up to 80 percent of USS funds are invested in public equities but reports have suggested £6 billion will be incrementally invested in private equity and alternative investments.
USS, which invests the savings of over 200,000 UK academics and university staff, is the second largest UK pension fund having operated since 1911. In 2005 it revealed a £6.6 billion deficit.

USS was not available to comment.