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Virginia Retirement System Return on Investment Unimpressive

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Virginia Retirement System photo 130830VRS_zpsb84c09c5.jpgVRS Board Chairman Diana F. Cantor has set a low bar for success. In a year when throwing darts at the public securities board yielded 16.34%, she hails an additional 1.26% as impressive. In any event, her team already told us that investment decisions were prompted by a computer program.

Oh, heck, that little bit of insight was in response to questions arising from a VRS investment in Star Scientific that yielded a loss of $87,581 on an investment of $289,000. Worse, this was after a series of losses by Maureen McDonnell in the same stock. But as we have all been told, Maureen only shares her investment strategies with her financial benefactor, Jonnie Williams.

“Schultze said it is not clear why the internal program, devised by VRS investment staff to use algorithms to analyze stock data, recommended purchase of stock in a company that hadn’t turned a profit in 10 years.” – Richmond Times Dispatch

And what we don’t know is the opportunity cost of the hundreds of millions of dollars Governor McDonnell siphoned from the VRS so that he could claim he balanced the state budget. Allowing that those funds would have been spread across the risk spectrum rather than invested only in public securities, those millions would still have been yielding that net 11.8% had they not been used as a long term obligation of the state, adding to the already unfunded obligations of the system.

Chairman Cantor also fails to mention that this follows a year when the system’s investments yielded a whopping 1.4%; not a performance that enhances long-term solvency. Certainly, in her view, last year was the result of the market rather than mediocre performance by her staff. One year the Obama market, the next pure investment genius.

  • glennbear

    Just a reminder, Diana is married to Eric Cantor the House Majority Leader and the “go to” guy in Washington for hedge fund manager types. Diana’s background is with bank holding companies and she sits on the boards of several corporations including Revlon. I am sure a search of VRS investments would show some interesting ties between those investments and their links to her and Eric. Let us not forget that during the last debt ceiling crisis it became known that he had made investments that would have yielded him a profit if the USA had defaulted.

  • swvagrl

    There has been so much media attention this spring and summer about the corruption of the Guv and the Missus that this very important story has been overlooked. As a former Virginia teacher who used to have money in the VRS, I always thought it was being handled competently. That’s what we were always told, but then, I used to think state government was fairly clean, too. I find it very, very hard to believe that the “Computer” picked this stock without some manipulation by real live people. At the very least, some media groups should be investigating this. Diana Cantor should not have this job because of a potential conflict of interest–it just looks bad. And, now there are or should be doubts in peoples’ minds about whether there is a real conflict of interest with decisions being made that that might enrich one of our Republican representatives. This entire thing smells, and ordinary citizens cannot find out the source, but media can get in there with shovels and find out for us. It’s a dirty job, but we will be better off for airing it.