Managing investments in-house has been very profitable in more ways than one for the Virginia Retirement System, Richmond.
By managing one-third of assets internally, the $58.3 billion pension fund has added $512 million in returns above benchmarks over the last five years, and saved $11.4 million each year in fees, VRS Board of Trustees Chairwoman Diana Cantor said in a Sept. 12 letter to Gov. Robert McDonnell and state legislators.
It has also benefited VRS' internal investment staff, who received a total of $4.5 million in performance bonuses, which were unanimously approved at the Sept. 12 board meeting.
“In addition to outstanding performance, the internal asset management team continues to operate at a low level of cost when compared to fees that would be charged by outside managers who offer similar strategies,” Ms. Cantor wrote. “We are confident that the fund will continue to benefit from their work in the years ahead.”
The $19.5 billion internal investment management program had $9.1 billion in equity-related strategies and $10.4 billion in fixed-income strategies as of June 30.
VRS reported investment returns of 11.8% for its fiscal year ended June 30, exceeding its benchmark of 11.1%.
This article originally appeared in the September 30, 2013 print issue as, "VRS doling out bonuses for outperformance, fee savings".