As executive director and chief investment officer, my primary goal is to ensure that we deliver on our mission to the Wisconsin Retirement System. This month, we announced preliminary 2021 year-end returns for the WRS. The Core Trust Fund ended the year with a preliminary net return of 16.89%, and the Variable Trust Fund finished 2021 with a preliminary net return of 19.95%.
These returns are expected to result in a positive annuity adjustment for retirees and stable contribution rates for employees and employers. Further, we continue to develop and obtain the necessary talent and technology to implement our sophisticated investment strategy. I could not be more pleased with our staff for navigating the market volatility throughout the year and remaining steadfast and committed to our long-term investment strategy.
2021 presented unusual challenges for SWIB. At the beginning of the year, we mourned the loss of our long-time Executive Director and Chief Investment Officer David Villa, who led our investment strategy for more than 15 years. It was difficult. At the same time, it was a credit to our professional staff, and the solid organization that David helped build, that we were able to remain focused, move forward, and end 2021 with strong investment performance.
Despite the continuing impacts of the pandemic on both our workplace and the markets, the level of collaboration and innovation across the organization and commitment by staff over the past year was both satisfying and impressive. We moved forward a number of initiatives that are helping keep the WRS one of the only fully funded public pensions in the country. Part of our work included building out the internal fixed income strategies we launched in 2020 to target less efficient segments of the market in mortgage-backed securities and high yield bonds. We also continued to enhance the infrastructure and technology needed to support new and innovative investment strategies.
As we look ahead to 2022, we have implemented a robust and diversified asset allocation that can help us navigate changes in market conditions without having to predict precisely when those changes will occur. As part of the asset allocation for 2022, we are implementing a new allocation to levered loans that will be managed internally. We continue to believe in the value of internal management to drive returns at costs lower than the fees paid to external managers when we can effectively support the strategy. Since 2006, when SWIB was managing just 20% of assets internally, we have been working to put in place the infrastructure and people to build our internal management program. Today, we are managing more than half of the retirement funds in-house.
What motivates me the most when I look to the future is that we will continue to be innovators to keep pace with an ever-changing investment management landscape. And while we will change and evolve, our commitment to our mission, vision, and values, which have established us as an economic pillar for the state of Wisconsin, remain the same. We remain focused on active investment strategies, thoughtful asset allocation, significant portfolio diversification, and cost-effective internal management.
In 2021, SWIB celebrated 70 years of service to the state of Wisconsin. The organization that started 70 years ago has not only endured but also flourished. Our continued success requires constant improvement to keep pace with rampant change in the economy, the world, and the investment industry. Being a leader today is no easier than it was 70 years ago. The future will hold new challenges, especially as we look to earn the returns needed to maintain the WRS. But as we embark on the next 70 years, now, more than ever, we remain committed to delivering results for the WRS and its members.