Public Equity Produced 12.3 Points of Connecticut's 15.1% Return

What's New

Connecticut returned 15.1% for the fiscal year, and global equity produced 12.3 points of it. The plan's fiscal year performance review attributes 0.6 points each to private equity and private credit. Infrastructure added 0.3 and real estate added 0.2. The plan held 51% in global equity against a 37% long-term policy target. It was underweight every private asset class.

Why It Matters

Boards building the case for private markets allocations will find a difficult year to cite. Connecticut beat its policy benchmark on the strength of an equity overweight it now proposes to reduce. The proposed policy lifts global equity to 43% and trims real estate to 8%. Committees that describe private markets as the engine of plan returns should read the contribution chart first.

By The Numbers

• 49.2% one-year return for emerging markets equity, the strongest segment in the plan.

• 12.7% one-year return for private equity, against 23.8% for domestic equity.

• 3.5% for real estate, against a 10% target the plan is cutting.

• $11.0 billion added during the year, bringing total assets to $73.7 billion.

Reality Check

One year of contribution data proves less than it appears. Connecticut committed $6.2 billion across 34 private market vehicles during the fiscal year, and none of that capital has produced a return. The private credit and infrastructure books are young, with NAV built largely on commitments made since 2020. Peer rankings carry the longer signal. The plan ranked in the 23rd percentile over one year among 27 funds above $10 billion. Over 10 years it ranked in the 62nd percentile among 23, which is where an underbuilt private program shows up.

The Wrap

The plan earned a strong year from an allocation it did not intend to hold, and is now moving toward the policy it wrote. The proposed policy carries an expected 20-year return of 8.4% against 8.0% for the current one. It also raises standard deviation to 14.0 from 13.5. The trade works if private markets deliver the premium the 10-year peer data has not yet produced. Closing an 8-point equity overweight will take several commitment cycles.