VRS Releases 2008 Returns

RICHMOND, VA, September 11, 2008 — After four years of exceptional performance, the Virginia Retirement System (VRS) experienced a -4.4 percent return on its investment portfolio for fiscal year 2008, ending the year with $55 billion in assets.

"While the portfolio out-performed its policy benchmarks, absolute returns suffered due to stress in the housing and credit markets and general economic weakness. In this environment, risk premiums increased, resulting in lower market prices for equities and other risk assets. The fund maintains a strong liquidity position which will enable us to make attractive new investments during this period of market dislocation. We continue to expect the fund to earn a reasonable return of 7 to 8 percent over the long term,” said Chief Investment Officer Charles W. Grant.

The fund’s private equity and fixed income produced returns of 15.5 percent and 6.3 percent, respectively, while real estate investments generated a 4.1 percent return. The fund’s public equity program experienced a -10.4 percent return and the credit strategies program had a -4.7 percent return.

The portfolio included $30.5 billion in public equity, $11.2 billion in fixed income, $4.5 billion in private equity, $4.1 billion in real estate and $4.0 billion in credit strategies, as of June 30, 2008. The three-year annualized return was 8.9 percent and the five-year annualized return was 11.3 percent.

“We remain confident in the global economy’s long-term growth prospects and the fund’s ability to generate acceptable returns over the long investment horizon. Putting this year into perspective, the fund’s five-year return was an outstanding 11.3 percent. In addition, the fund is ably managed by an exceptional investment staff with the skills to take advantage of investment opportunities that present themselves during this period of economic slowdown,” said VRS Board Chairman A. Marshall Acuff, Jr.

VRS serves over 600,000 active members, retirees and beneficiaries. The active employees include about 147,000 teachers, 105,000 local government employees and about 94,000 state employees. In addition, VRS provides benefits to over 136,000 retirees and beneficiaries. The retirement system ranks as the nation’s 24th largest public or private pension fund.