RD84 - Virginia Birth-Related Neurological Injury Compensation Fund Quarterly Investment Analysis - Period Ending December 31, 2012 and Virginia Birth-Related Neurological Injury Compensation Program Comprehensive Annual Financial Report December 31, 2011 (With Independent Auditors’ Report Thereon)


Executive Summary:
Faced with the uncertainty of gridlock over Fiscal Cliff negotiations, the broad, high quality U.S. stock and bond markets were nearly unchanged from the preceding quarter, with the S&P 500 Index losing -0.4% and the Barclays Aggregate Bond Index gaining 0.2% for the 4th quarter. International stocks and emerging markets bonds however, posted more positive results with the MSCI World Ex-U.S. Equity Index and the JPM Emerging Markets Bond Index advancing 5.9% and 3.4%, respectively.

• The Fund gained 1.3% in the 4th quarter and 11.5% for the year, outpacing the Index Target’s returns of 1.1% and 9.1%, respectively.

• As shown in the table on page 3, the Fund outpaced the Index Target policy benchmark over all periods measured.

• The Fund had minimal variance from Policy allocation targets, as shown in the charts on page 8, and requires no rebalancing.

• In nominal terms, the best performance came from international equities (+6.7%) and alternatives (+1.3%) which more than offset the slight loss in the U.S. equity segment (-0.4%) of the portfolio.

• For the full year, the Fund’s 11.5% gain came primarily from strong equity manager performance, with the International segment up 22.7% and the U.S segment posting a 16.6% advance.

• The fixed income and alternatives segment of the portfolio achieved solid returns of 7.3% and 8.7%, respectively, for the year.