Private Equity Powers VRS Returns, Just Missing Assumed Rate

Fund planning on bulking up private investments.

The Virginia Retirement System’s investments returned 6.7% for the fiscal year ended June 30, boosting the fund’s assets under management to $82.3 billion.

However, the fund just missed its 7% assumed rate of return. Chief Investment Officer Ronald D. Schmitz, said he was “pleased with the fund’s level of performance and resilience, especially considering the volatility of domestic and global markets during the past year.”

Schmitz was also proud of the fund’s private equity and fixed income portfolios, which did much of the heavy lifting during the year. Private equity returned 14% and fixed income harvested 8.3%.

The rest of the portfolio had a fair showing.Real assets reaped 7.8%, credit strategies generated 6.8%, and private investment partnerships returned 6.7%. Public equities and multi-asset public strategies, were laggards returning 3.9% and 2.2% respectively.

The fund plans on adding private investments to weather rough patches in the markets.

“The VRS Board supports the long-term strategic objective of increasing exposure to private markets, which helped offset the more moderate returns in traditional stocks and bonds,” said Board Chairman Mitchell L. Nason.

The Virginia Retirement system’s asset mix as of June 30 was 40.1% public equity, 15.9% fixed income, 14.5% credit strategies, 13.5% real assets, 11.5% private equity, 2.7% multi-asset public strategies, 1.3% private investment partnerships, and 0.5% cash.

The fund returned 7.5% in 2018.

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