Under a U.S. Treasury investment program, the Connecticut Retirement Plans and Trust Funds has achieved returns ranging between 34 percent and 45 percent ”“ and would have done better had it hired Norwalk-based GE Capital to invest its funds.
It was welcome news as Connecticut struggles with the ramifications of some $34 billion in unmet pension and health care costs for retirees. Last month, a panel convened by Gov. M. Jodi Rell outlined steps the state could take to help meet its obligations; Nancy Wyman, the state”™s comptroller and lieutenant-governor-elect, previously had proposed an automatic funding mechanism to sequester funds to meet those obligations down the road.
Connecticut”™s pension fund invested $200 million in Treasury”™s Public Private Investment Partnership program, and its managers have notched two of the top three performances to date under PPIP.
PPIP is an investment vehicle developed by Treasury in 2009 as part of the Troubled Asset Relief Program, and was designed to furnish liquidity for the capital markets by investing in existing residential and commercial mortgage-backed securities under distress from the collapse of the real estate market.
In September 2009, Connecticut awarded contracts to three managers qualified to invest funds under PPIP: AllianceBernstein L.P. and Marathon Asset Management, both based in New York City; and Atlanta-based Invesco Ltd. Assets invested in PPIP represent roughly 15 percent of the Connecticut Retirement Plans and Trust Funds”™ (CRPTF) real estate portfolio, which was valued at $784 million as of June 30. The real estate portfolio represents 3.6 percent of the overall trust fund.
“These performance numbers are fantastic, and will certainly help the CRPTF to turn the corner toward improved performance in its real estate portfolio,” said Denise Nappier, elected this month to a fourth, four-year term as Connecticut treasurer, in a prepared statement. “The Great Recession has been especially brutal for real estate markets, and this PPIP investment has gone a long way in allowing us to offset the volatility in our real estate investments by making opportunistic investments in the distressed residential and commercial mortgage-backed markets.”
Norwalk-based GE Capital led all investment managers in the PPIP program, in partnership with New York City-based Angelo, Gordon & Co. The companies produced a 52 percent annualized return, followed by Marathon Asset Management at 44.3 percent and AllianceBernstein at 40.8 percent.
To date, the program has invested $18.6 billion of capital in those markets, which the Treasury says has helped bring stability to the real estate markets.
