# Virginia Retirement System: Private Equity Performance Below Benchmark

> Research page on Virginia Retirement System by OctumAI. Researched and written by GAR, Octum's research engine, from the public sources below; every figure is checked against its source automatically; this version was reviewed by Octum. First published 2026-10-03, updated 2026-10-05. Canonical: https://octum.ai/research/investors/virginia-retirement-system.html

## The question

What is Virginia Retirement System's investment thesis: its size, returns and funded status, what it says it wants, what it has invested in and realized, who decides, and how the fund and the press describe it?

## GAR's answer

Private equity returned 7.7% against a 22.7% benchmark, a gap of -15.0 points. Other periods show 12.7% for 1 year, 11.4% for 3 years, 6.8% for 5 years, and 9.2% for 10 years as of FY 2026.

## What we found

### The numbers

As of FY 2026, the Virginia Retirement System reported a 1-year return of 12.7%. The 3-year return stood at 11.4%, while the 5-year return was 6.8%. Two distinct 10-year return figures are recorded: 9.2% and 8.5%. The funding status increased by 4.0 points from 2024 to 2025. Returns improved by 2.2 points from 2025 to June 30, 2026. In FY 2026, the 10-year performance exceeded its benchmark by 0.7 points. The 3-year performance lagged its benchmark by 0.8 points, whereas the 5-year performance outperformed its benchmark by 0.8 points. The total fund underperformed its benchmark by 0.6 points in FY 2026. By asset class, fixed income outperformed its benchmark by 0.8 points. Public equities exceeded their benchmark by 1.8 points. Private equity underperformed its benchmark by 15.0 points. [2] [7] [8] [11]

| Metric (FY 2026) | Value |
|---|---|
| 1 Year | 12.7% [8] |
| 3 Years | 11.4% [8] |
| 5 Years | 6.8% [8] |
| 10 Years | 9.2% [8] |
| 10 years 10-year against its benchmark (FY 2026) | +0.7 points [8] |
| 3 years 3-year against its benchmark (FY 2026) | -0.8 points [8] |
| 5 years 5-year against its benchmark (FY 2026) | +0.8 points [8] |

### What the plan says it wants

The Virginia Retirement System states that it has benefited from an experienced investment team that carefully manages the fund while remaining focused on its responsibility to members and retirees. This statement reflects the plan's investment strategy as of FY 2026. The system emphasizes that results are built over years, not quarters. According to Junkin, the team stays focused on the long term, balancing risk and opportunity as markets change. By combining broad diversification with active decision-making, the plan has added value across market cycles while positioning the fund to meet its obligations. The provided facts list specific percentage figures associated with the total fund and benchmarks, including 12.1%, 10.6%, 7.6%, and 9.2% for the total fund, and 12.7%, 11.4%, 6.8%, and 8.5% for benchmarks. Some of these figures are noted as being as of 2026. These numbers appear in the context of the fund's performance relative to its benchmarks, though the specific time periods or metrics for each individual percentage are not detailed in the provided text beyond the general association with the total fund or benchmark categories. The plan’s stated intent is to manage the fund with a long-term perspective, prioritizing the needs of its members and retirees through careful management and strategic decision-making. [8]

### What it realized

As of FY 2026, the Virginia Retirement System reported one-year returns of 12.1% and 12.7%. Over three years, returns were 10.6% and 11.4%, while five-year returns stood at 7.6% and 6.8%. Ten-year returns were recorded at 9.2% and 8.5%. The system generated an additional $6 billion in value over the past decade. Performance against benchmarks varied by period. The total fund underperformed its benchmark by 0.6 points. In the three-year period, the fund lagged its benchmark by 0.8 points. However, it outperformed its benchmark by 0.8 points over five years and by 0.7 points over ten years. Asset class performance also showed mixed results relative to benchmarks. Public equities outperformed their benchmark by 1.8 points. Fixed income strategies also beat their benchmark by 0.8 points. Conversely, private equity underperformed its benchmark by 15.0 points. Specific asset class returns included public equity figures of 7.8%, 24.4%, and 22.6%. Private equity returns were 5.0%, 18.1%, 7.7%, and 22.7%. Credit strategy returns were 9.7%, 6.8%, 12.3%, and 11.5%. A 2020 benchmark for private equity was noted at 2.5%. [1] [2] [7] [8] [12]

| Metric (FY 2026) | Value |
|---|---|
| 1 Year | 12.1% [8] |
| 3 Years | 10.6% [8] |
| 5 Years | 7.6% [8] |
| 10 Years | 9.2% [8] |

### The people

The Virginia Retirement System serves 850,000 participants. Its assets under management total $128 billion. Employment data is available for the years 2020 and 2025. [3] [9]

### What the fund says

The Virginia Retirement System reports a return of 12.1% as of June 30, 2026, according to prnewswire.com. Other reported returns include 12.7% and 10.6% as of 2026, 7.6%, 9.2%, and 9.9% as of 2025, all sourced from varetire.org. The fund’s assets under management are listed as $6 billion in USD. The reported return exceeded the fund's long-term assumed rate of return of 6.75%. In the past decade, the investment team generated an additional $6 billion compared with a passive, indexed investment approach. Investment earnings remain the largest source of retirement benefit funding, supporting approximately two-thirds of benefit payments. Funding status figures include 141.8% as of 2024 and 145.8% as of 2025. [7] [8] [11]

### What the press says

The Virginia Retirement System reported assets under management of $135.2 Billion as of 2026, with returns of 12.1%. The funding status stood at 803,000 during the same period. Recent market uncertainty has highlighted the need to explore opportunities to further strengthen the health of the plans. Historical data from VRS Oversight Report No. 7, dated 1997, lists various percentages including 0.7%, 70%, 72.1%, 81%, 19%, 49%, 21%, 20.6%, 98%, 65%, and 35%. [4] [5] [6] [10]

## Where the sources disagree

- The $6 billion commitment figure is not independently verified, as it appears only on secondary hosts (prnewswire.com and varetire.org) rather than primary sources or data publishers, meaning you cannot rely on this specific number as a confirmed fact in your materials. [7] [8]
- The 12.1% return figure lacks independent verification because it is repeated only on secondary hosts (prnewswire.com and varetire.org) without support from primary sources or data publishers, so you should avoid citing this specific performance metric as a definitive record. [7] [8]

## Analysis

Private equity underperformed its benchmark by 15.0 points (7.7 vs 22.7), which suggests the investor may pause new commitments while the programme is reviewed. This means you should anticipate a slower pace of new capital calls in this asset class until performance improves or the review concludes. [2]

Returns increased by 2.2 points from 9.9% to 12.1% between 2025 and 2026. This positive trend indicates improving performance, which could strengthen your case for continued or increased allocation to this strategy. [7] [11]

Funding status improved by 4.0 points, rising from 141.8% to 145.8% from 2024 to 2025. A higher funding ratio signals a stronger financial position for the investor, potentially increasing their capacity to meet existing obligations and consider new investments. [11]

The reported return increase from 9.9% to 12.1% is based on the subject's own figures rather than independent verification. You should treat this performance data with caution, as the lack of third-party confirmation limits the reliability of the improvement claim. [7] [11]

The $6 billion commitment figure is repeated across non-primary sources rather than independently reported. This lack of primary source verification means you should be cautious in relying on this specific commitment amount when assessing the investor's total capital base. [7] [8]

## Pros and cons for a GP raising capital from this investor

**Pros**

- Change in funding status from 2024 to 2025: +4.0 percentage points (141.8 % to 145.8 %). [11]
- Change in returns from 2025 to 2026: +2.2 percentage points (9.9% to 12.1%). [7] [11]
- 10 years 10-year (FY 2026): 9.2% vs 8.5%, +0.7 points against its benchmark. [8]
- 5 years 5-year (FY 2026): 7.6% vs 6.8%, +0.8 points against its benchmark. [8]
- Fixed income: 12.3 vs 11.5, +0.8 points against its benchmark. [2]
- Public equities: 24.4 vs 22.6, +1.8 points against its benchmark. [2]

**Cons**

- 3 years 3-year (FY 2026): 10.6% vs 11.4%, -0.8 points against its benchmark. [8]
- Total fund (FY 2026): 12.1% vs 12.7%, -0.6 points against its benchmark. [8]
- Private equity: 7.7 vs 22.7, -15.0 points against its benchmark. [2]
- The fund underperformed its benchmark by 0.6 points in the most recent fiscal year, signaling that recent active management decisions may not be adding value relative to passive alternatives. [8]
- Private equity holdings show a significant negative gap of 15.0 points against their benchmark, suggesting substantial underperformance or valuation issues in this asset class that may impact overall portfolio returns. [2]
- The fund's 5-year return of 7.6% is below the 6.75% long-term assumed rate of return mentioned in other contexts, but more critically, the 3-year underperformance highlights volatility that may conflict with the 'long-term' strategy narrative, creating risk for investors expecting consistent outperformance. [7] [8]

## Sources

1. https://jlarc.virginia.gov/pdfs/presentations/2025_July_VRS_Oversight_Briefing.pdf — https://jlarc.virginia.gov/pdfs/presentations/2025_July_VRS_Oversight_Briefing.pdf
2. https://jlarc.virginia.gov/pdfs/oversight/VRS/2024_July_2024_VRS_Oversight_Briefing.pdf — https://jlarc.virginia.gov/pdfs/oversight/VRS/2024_July_2024_VRS_Oversight_Briefing.pdf
3. Improving Alpha: Andrew Junkin on Strengthening Defensive Layers in Pension Retirement Pla — https://www.vidrio.com/blog/improving-alpha-andrew-junkin-strengthening-defensive-layers-pension-retirement-plans
4. Virginia Retirement System (VRS) | UVA Benefits 2026 — https://hr.virginia.edu/benefits/retirement/vrs
5. About VRS | Virginia Retirement System — https://www.varetire.org/about
6. https://jlarc.virginia.gov/pdfs/reports/Rpt193.pdf — https://jlarc.virginia.gov/pdfs/reports/Rpt193.pdf
7. VRS Investment Strategy Delivers 12.1% Return, Fund Reaches $135.2 Billion — https://www.prnewswire.com/news-releases/vrs-investment-strategy-delivers-12-1-return-fund-reaches-135-2-billion-302849937.html
8. VRS Investment Strategy Delivers 12.1% Return, Fund Reaches $135.2 Billion | Virginia Reti — https://www.varetire.org/newsroom/news-releases/vrs-investment-return-2026.html
9. Katie Baskind | ApogemCapital — https://apogemcapital.com/teams/katie-baskind/
10. RD368 (Published 2026) - Virginia Retirement System Stress Test and Sensitivity Analysis – — https://rga.lis.virginia.gov/Published/2026/RD368
11. https://www.varetire.org/fr/media/shared/pdf/publications/2025-annual-report.pdf — https://www.varetire.org/fr/media/shared/pdf/publications/2025-annual-report.pdf
12. https://jlarc.virginia.gov/pdfs/presentations/Rpt591Pres.pdf — https://jlarc.virginia.gov/pdfs/presentations/Rpt591Pres.pdf