VRS Achieves 20.4 Percent Return

RICHMOND, VA, August 23, 2007 - The Virginia Retirement System (VRS) announced a 20.4 percent return on its investment portfolio for fiscal year 2007, ending the year with $58 billion in assets. This return surpassed the benchmark of 18.5 percent for investments of the type held by the VRS Trust Fund.

All asset classes performed well and exceeded the fund’s long-term expectations. The fund’s private equity and public equity investments (U.S. and international stocks) produced outstanding returns, at 32.0 percent and 24.5 percent respectively. Real estate investments also generated an exceptional return at 23.8 percent. The fund’s credit and fixed income programs contributed returns of 13.6 percent and 6.0 percent respectively.

"Market conditions were favorable for all of our investment programs. A strong corporate sector fueled high returns in equity and credit related investments, while real estate continued to benefit from good operating fundamentals and strong investor demand. We are particularly pleased that the investment team was able to position the portfolio to earn a meaningful return premium over the market return,” said Chief Investment Officer Charles W. Grant.

The portfolio included $37.6 billion in public equity, $11.2 billion in fixed income, $3.6 billion in private equity, $2.9 billion in real estate and $2.1 billion in credit strategies, as of June 30, 2007. The three-year annualized return was 14.9 percent and the five-year annualized return was 12.8 percent. “VRS expects returns to be more moderate in the years ahead, as represented in the fund’s long-term investment return assumption of 7.5 percent,” added Grant.

According to Wilshire’s Trust Universe Comparison Service [TUCS] Report, VRS places in the upper 3 percent of public pension funds in fiscal year 2007 returns. VRS Board Chairman Paul W. Timmreck noted that Virginia is fortunate to have Mr. Grant and his talented staff managing the VRS Trust Fund. “I know the entire board joins me in congratulating the investment staff on its exemplary performance," Timmreck said.

VRS serves more than 582,000 active members, retirees and beneficiaries. The active employees include approximately 145,000 teachers, 101,000 local government employees and 91,000 state employees. In addition, VRS provides benefits to more than 130,000 retirees and beneficiaries. The retirement system ranks as the nation’s 26th largest public or private pension fund.

News is archived every four months.