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.