Connecticut’s pension system, managed by the Office of the State Treasurer, encompasses the State Employees Retirement System (SERS) and the Teachers’ Retirement System (TRS), with combined assets of approximately $45 billion as of mid-2024. The system provides retirement security for the state’s public employees and educators.
Investment Strategy
Connecticut’s pension funds are invested across a diversified mix of public equities, fixed income, real assets, and alternative investments. The State Treasurer, in consultation with the Investment Advisory Council, sets the strategic asset allocation for the pension portfolio. The investment strategy is designed to achieve long-term returns sufficient to meet actuarial assumptions while managing risk.
Public equities represent the largest allocation, spanning domestic and international markets. Fixed income provides portfolio stability and cash flow generation. The pension system has progressively increased its alternatives allocation over the past decade, reflecting a recognition that private markets can enhance returns and provide diversification relative to publicly traded assets.
Private Markets Approach
Connecticut’s private markets program includes allocations to private equity, real estate, and private credit. The private equity portfolio encompasses commitments to buyout, growth equity, and venture capital funds across the fund size spectrum. The system seeks to maintain vintage year diversification and geographic diversification across its private equity portfolio.
Real estate investments include core and value-add strategies across property types. Private credit has been an area of growth, with the system committing to direct lending and structured credit strategies that provide attractive current income.
The state has implemented policies encouraging the consideration of minority-owned, women-owned, and emerging investment managers, reflecting a commitment to broadening the manager universe while maintaining fiduciary standards. All manager selections are based on investment merit, with diversity and inclusion serving as additional factors in the evaluation process.
Investment staff and external consultants conduct due diligence on prospective managers, evaluating track record, team stability, investment process, and operational capabilities. Commitment sizes typically range from $25 million to $100 million depending on the strategy and fund size.
Frequently Asked Questions
How large is Connecticut's private equity program?
Connecticut targets approximately 11% of its pension assets in private equity, representing roughly $5 billion in committed capital. The program invests across buyout, growth equity, and venture capital strategies with diversification across fund sizes and geographies.
Does Connecticut invest with emerging managers?
Connecticut has shown interest in emerging and diverse managers as part of its broader investment program. The state has policies encouraging consideration of minority, women, and emerging managers, though investment merit remains the primary selection criterion.
How are investment decisions made for Connecticut's pension funds?
The State Treasurer oversees pension investments with support from the Investment Advisory Council and internal investment staff. External consultants provide independent evaluation of managers and strategies. New commitments typically require staff recommendation and review by the advisory council.
