Connecticut Plans Weigh Increased Real Estate, Infrastructure Allocations

By Mario Marroquin

The Connecticut Retirement Plans and Trust Funds (CRPTF) is considering increasing its allocations towards real estate and real assets – a change that, among other recommended updates to the plans’  long-term policy allocations – could see expected 10-year returns increase from 5.9% to 6.3%, according to materials from the plans’ June 8 annual strategic asset allocation update.

The CRPTF’s asset allocation subcommittee and Chief Investment Officer Ted Wright discussed bifurcating real assets into three separate classes for strategic asset allocation and doing away with the system’s classification for Treasury Inflation Protected Securities (TIPS) as a distinct asset class.

The meeting materials from the June 8 meeting noted overall expected returns continue to be revised lower this year when compared to 2021 and proposed the following changes to long-term policy investment allocations:

·         Reduce the allocation towards global equity by 5 percentage points from its current policy of 40%.

·         Reduce the allocation for non-core fixed income from 8% to 2%.

·         Reclassify TIPS as part of fixed income.

·         Increase private credit and real estate allocations from 5% and 10% to 10% and 12%, respectively.

·         Increase private equity allocation from 10% to 15%.

CRPTF consists of six state pension funds and nine state trust funds including the $22.5 billion Teacher’s Retirement Fund, the $16.9 billion State Employees’ Retirement Fund and the $3.3 billion Municipal Employees Retirement Fund.