Governor  Dannel P. Malloy
 

Pension Funds

Fiscal Year 2016 in Review

The Connecticut Retirement Plans and Trust Funds ("CRPTF") generated a net investment return of 0.35 percent for Fiscal Year 2016, including a 1.15 percent return for the Municipal Employees Retirement Fund, which outperformed its benchmark of 0.77 percent.

The State's two largest pension funds - the Teachers' Retirement Fund ("TERF") and the State Employees' Retirement Fund ("SERF") - also outperformed their benchmarks.  The funds posed net investment returns of 0.25 percent and 0.26 percent, respectively, for Fiscal Year 2016, versus their benchmarks of -0.06 percent and -0.01 percent.

For the total CRPTF, market value stood at $29.1 billion as of June 30, after payment of pension benefits, fees and expenses, down from $29.7 billion a year earlier.  The TERF and SERF jointly had a total market value of approximately $26.1 billion as of June 30.  Together the two funds comprise 90 percent of the CRPTF.

During Fiscal Year 2016, the first commitment was made to the opportunistic in-state investment program, an initiative of Treasurer Nappier in the Private Investment Fund.  The program allocates capital for Connecticut-based companies in various stages of development.   

Over the course of the fiscal year, the CRPTF made commitments of $250 million to three investment opportunities in the Private Investment Fund and $100 million to one investment opportunity in the Real Estate Fund.  Additionally, Treasurer Nappier selected four managers to provide the CRPTF with global investment management services and hired a new Private Investment Fund consultant.  The Office of the Treasurer issued a Request for Proposals for a general investment consultant.

The Connecticut Horizon Fund has $1 billion in assets in its fund-of-funds public market program, a $155 million private equity allocation and a $170 million alternative investment allocation.  As of June 30, 2016, the public market program totaled 4 managers and 36 sub-managers. Emerging firms represented the largest allocation of total assets at 75 percent; minority-owned firms represented 42 percent; women-owned firms followed with 31 percent; and Connecticut-based firms were at 19 percent of total assets.* Additionally, there were 3 private equity managers and 21 sub-managers; including 8 minority-owned, 3 emerging, 1 women-owned and 9 Connecticut-based.  In the separately managed Fund-of-Hedge Fund mandate within the Alternative Investment Fund, there were 2 managers and 24 sub-managers; the breakdown includes 21 emerging firms, 12 minority-owned firms, 5 Connecticut-based firms, and 4 women-owned firms.*
*Total exceeds 100 percent because some investment firms are owned by individuals who represent more than one demographic category.

Expansion of the diversity of firms with which the Pension Funds Management division does business continued during the Fiscal Year. Overall, minority-owned, women-owned, Connecticut-based and emerging firms, 37 in all, comprised almost 29 percent of the firms with which the division did business; these firms earned fees of $38.5 million, representing nearly 37 percent of all fees paid by the division.

The Connecticut Treasury was ranked first in the nation for pension funds management with a grade of A by the Center for Public Integrity, as part of its 2015 State Integrity Investigation.  The Office received high marks for the transparency of the management of its pension funds, effectiveness of the laws and regulations governing conflicts of interest, and citizen access to disclosures and pension fund documents.