Universities Superannuation Scheme, Liverpool, England, returned about 6% for the year ended March 31, bringing its assets to £67.4 billion ($84.1 billion), its newly released annual report shows.
For the fiscal year ended March 31, 2018, the plan reported a 6.2% return.
The funding ratio as of March 31 was 92%, down slightly from the previous year's 94%.
Longer-term returns were an annualized net 10.1% for the five years ended March 31, vs. an annualized 10.6% for the five years ended March 31, 2018.
While the report did not provide an exact number for its fiscal-year 2019 return, it did reveal that the scheme underperformed during the final quarter ended March 31 due to its underweight position in top-performing asset classes.
"With asset markets recovering sharply in the final quarter of the year to 31 March 2019, the fund produced a positive return of 5.74% net of costs, marginally above the liability proxy but below the Reference Portfolio return," the report said. "Underperformance arose entirely in this final quarter, driven by our underweight allocation to the U.S. equity market (which rebounded sharply after a weak conclusion to 2018) and to U.K. index-linked gilts (which gained in March 2019 amid heightened Brexit related uncertainty)."
The report noted that its five-year annualized return exceeded its reference portfolio (its internal benchmark system) by 0.31%.
"Looking ahead, we expect the drivers of short-term underperformance to reverse in a period of normalization given relatively high U.S. equity valuations and U.K. real yields discounting an overly pessimistic outlook for the U.K. economy in the long-term," the report said.
