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Virginia Retirement System has assets in AIG, Lehman

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By Emily C. Dooley


The Virginia Retirement System’s portfolio, held by more than 600,000 people, includes assets in the recently bailed-out insurer American International Group Inc. and the bankrupt Lehman Brothers Inc.

But an investment loss, if any, will not be significant, said Robert P. Schultze, director of the VRS, the 24th-largest public or private pension fund.

As of July 31, the system had a portfolio of $54.3 billion in stocks, bonds, real estate, cash and credit holdings. The AIG and Lehman Brothers investments amount to less than half of 1 percent of total assets.

“That’s a small piece of our overall portfolio,” Schultze said.

The Virginia Retirement System invested $27.6 million in AIG. About $12.6 million in stock will likely be wiped out, but it is unclear how the $15 million in bonds will fare, Schultze said.

The retirement system also holds up to $125 million in Lehman Brothers stock and bonds.

Whether Lehman Brothers-associated securities will lose value is unclear.

The troubled firm announced yesterday that it signed a deal for the investment banking division of Britain’s Barclays Bank PLC to buy Lehman investment banking, equities and trading operations as well as the company’s New York headquarters and two data centers. The $1.75 billion deal awaits bankruptcy court approval.

VRS holds 15,000 equities. “If you name any stock you can think of, we probably have something in it,” Schultze said.

Its members are current and former teachers and local and state government employees.

Schultze said any losses will likely be offset by gains elsewhere in its diversified portfolio.

“Diversity in and of itself is extremely valuable,” said Alan Gayle, senior investment strategist at Trusco Capital Management in Richmond.

“Different types of assets respond differently to the same economic conditions. A loss in one area can at best be partially offset by other gains.”

Schultze declined to provide how much value the portfolio lost during the past week in part because of reporting constraints. About 85 percent of the portfolio is traded daily on such regulated exchanges as the Nasdaq stock market.

Daily reports are easy to obtain for those holdings. But the remaining 15 percent of assets—real estate, hedge funds—are traded privately and daily information is not always available. 

Source: Richmond Times-Dispatch


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