VIRGINIA, USA — In response to the invasion of Ukraine, Virginia Governor Glenn Younkin recently urged the state’s retirement system board of trustees to divest—or get rid of—any Russian assets the pension fund has in its portfolio.
QUESTION
Does the VRS trust fund have any Russian investments? And if so, could they be sold?
SOURCES
Jeanne Chenault, with the Virginia Retirement System
Keith Brainard, the research director with the National Association of State Retirement Administrators
ANSWER: YES
Chenault said the fund is made up in part by Russian assets—but it’s a very small part, 0.1%.
According to the most recent performance report, the VRS Trust Fund is valued at $107.2 billion. Our experts agree: the $107 million in Russian money is a "minimal" amount of the total.
"Point-one percent of the portfolio could reasonably be considered a negligible portion of the portfolio, perhaps even immaterial,” said Brainard.
He says the money in pension funds belongs to the people who put it in there—not public or taxpayer dollars.
The VRS Board of Trustees manages the money and it's up to the Trustees to decide what's traded, bought or sold. Brainard said they're legally and morally obligated to make decisions based on the best interest of the participants, not on any outside factors.
He said that most Russian-based assets are held in larger index funds, and fund managers would not sell an index fund just to get rid of the small Russian portion. That’s because doing so might negatively impact the entire portfolio.
The small percentage also means that even a drop in the value of Russian currency should not have a major impact on the overall retirement fund.
"It's important that the retirement system trustees keep their eye on the prize, on the big portfolio, and not allow such a small portion of the portfolio to drive decisions that could affect the bulk of the portfolio,” said Brainard.
He says even if the trustees decided it was best to sell them, it would be almost impossible to do so. The Russian market is closed, and there are trade restrictions and sanctions in place.
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