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VRS boosts PE target in response to COVID-19

The US public pension has fast-tracked its planned PE target allocation increase to mitigate losses incurred by its public equity investments.

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Institution: Virginia Retirement System
Headquarters: Richmond, United States
AUM: $82.30bn
Allocation to alternatives: 26.46%
Bitesize: $100-200m

Virginia Retirement System has boosted its immediate target allocation to private equity from 11.0 percent to 13.0 percent in response to the detrimental effect the COVID-19 pandemic has had on its public equity portfolio, according to materials from the pension’s April 2020 board meeting.

VRS initially planned to increase its target allocation to the asset class by July 2021, but has instead moved to fast-track this with the new target effective immediately.

The $82.30 billion US public pension’s current private equity allocation stands at 13.70 percent, having increased incrementally by quarter since reaching 11.30 percent in March 2019. VRS also noted in its April board meeting that its long-term policy allocation to private equity is 14.0 percent, which the pension intends on reaching after the conclusion of the 2021 financial year.

As illustrated below, VRS has made five commitments to private equity vehicles since the turn of the year, which combined constitute $900 million.

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