The $124 billion Virginia Retirement System (VRS) has made two new allocations totaling more than $500 million, continuing to expand its exposure to credit and hedge fund strategies following a period of robust performance across its alternatives portfolio. 

The Richmond-based pension fund, which manages assets for more than 750,000 public employees, retirees, and beneficiaries, committed €300 million (approximately $350 million) to ICG Europe IX, a closed-end fund managed by Intermediate Capital Group (ICG). The vehicle targets subordinated debt and equity investments in mid-market companies across Europe and has reportedly drawn interest from several major public pension systems as it pursues a €10 billion capital raise. 

The investment underscores VRS’s confidence in its $18.6 billion credit strategies portfolio, which delivered 9.2% returns over the past 12 months—one of the strongest-performing asset classes in the fund’s lineup. The pension’s credit program focuses on private and structured credit strategies that aim to generate income and capital appreciation while maintaining diversification across geographies and sectors. 

In a separate move, the system’s $5.3 billion diversifying strategies program added a new $200 million mandate in early October to the Saba Capital Master Fund, a multi-strategy hedge fund managed by Saba Capital Management. Founded in 2009 by Boaz Weinstein, Saba is best known for its credit relative value and capital structure arbitrage strategies, as well as opportunistic plays across volatility and tail-risk protection. 

The diversifying strategies portfolio has produced annualized returns of 5.4%, contributing to the system’s broader effort to reduce reliance on traditional equity and fixed-income exposures while enhancing risk-adjusted returns through active, opportunistic mandates.