Virginia Retirement System Returns 9.9% in Fiscal 2024

The Virginia Retirement System announced a 9.9% return on its investments in fiscal 2024, which ended June 30. Assets of the fund grew to $113.9 billion, a record high for VRS.

Over the past three, five, 10, 15 and 20 years, the fund returned an annualized 5.5%, 8.7%, 7.6%, 8.4% and 6.7%, outperforming its benchmark for each period. While the fund’s 9.9% return in fiscal 2024 outperformed its assumed rate of return of 6.75%, VRS underperformed its benchmark of 11.6%.

“In this environment, even with a strong stock market, VRS continues our philosophy of being very diversified because the future is much more uncertain, and we want to be able to continue to meet our commitment to retirees and beneficiaries,” said Andrew Junkin, CIO of VRS, in a recorded statement.

The fund’s portfolio allocation is divided across public equities (33%), private equity (17%), credit strategies (15.1%), diversifying strategies (3.2%), fixed income (14.7%), real assets (12.4%), private investment partnerships (2.2%), cash (2%) and exposure management (1.1%).

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The fund’s public equities portfolio returned 20.1%, and credit strategies returned 11.7%. Diversifying strategies returned 9.7%. Private investment partnerships returned 8.2%, while private equity and fixed income returned 5.8% and 3.8%, respectively. Real assets were the only asset class in VRS’s portfolio with losses, returning negative 3.2%.

For the 2024 calendar year to date, as of June 30, the fund has returned 5%. VRS manages the investments for more than 800,000 retirees and beneficiaries, who are current and former public employees, including teachers, public workers, law enforcement and firefighters.

“Our work is focused on generating long-term returns while managing risks,” said Junkin. “A highly diversified portfolio is central to our strategy. Through active management, our investment team has added approximately $7.2 billion to the portfolio over the past decade. That’s especially important because investment earnings fund about two-thirds of benefit payments to VRS retirees and beneficiaries.”

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Equities were responsible for all of Norway’s Government Pension Fund Global’s first half investment returns, as the sovereign wealth fund’s investment portfolio gained 2.1% in the second quarter and 8.59% for the first half of 2024. The returns brought its asset value to 17.75 trillion kroner ($1.69 trillion).

Performance for both the second quarter and the first half fell short of the pension fund’s benchmark index by 0.23 and 0.04 percentage points, respectively.

Equities were the top-performing investments for the fund and the only ones that produced positive returns in the first half of the year, gaining 12.47% for the period and 3.07% for the quarter. Fixed-income investments declined 0.27% for the quarter and 0.62% for the first half, and investments in unlisted real estate gained 0.04% for the quarter but were down 0.50% for the half. The worst-performing investments were in unlisted renewable energy infrastructure, which lost 7.11% for the quarter and 17.69% for the first half.

“The equity investments gave a very strong return in the first half of the year,” said Norges Bank Investment Management CEO Nicolai Tangen in a statement. “The result was mainly driven by the technology stocks, due to increased demand for new solutions in artificial intelligence.”

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Norges Bank, Norway’s central bank, manages the GPFG on behalf of the Ministry of Finance. According to Norges Bank, it is now reporting its updated holdings list twice annually instead of once per year. As of the end of June, the pension fund’s asset allocation was 72.01% equities, 26.15% fixed income, 1.73% unlisted real estate and 0.11% unlisted renewable energy infrastructure. This compares with 70.88% equities, 27.10% fixed income, 1.91% unlisted real estate and 0.11% unlisted renewable energy infrastructure at the end of 2023.

“We are already the world’s most transparent fund, but now we are increasing transparency even further,” said Tangen. “From now on, everyone will be able to find an updated overview of all our investments on a half-yearly basis.”

Among the equity investments, the tech sector provided the highest first half returns, gaining 27.9% during the period, followed by financials, which were up 13.8%. Combined, the sectors make up more than 40% of the pension fund’s equity investments, with a 25.8% allocation for tech stocks, and a 15% allocation to financials.

Industrial stocks provided an 8.2% return, followed by investments in consumer discretionary, utilities and telecommunications, which gained 7.9%, 6.2% and 5.2%, respectively. Consumer staples and real estate stocks increased 1.4% and 1.2%, respectively, while the GPFG’s basic materials stocks were the only equity investments not to provide gains for the half, declining 0.3%.