Connecticut Retirement Plans & Trust Funds, Hartford, will issue an RFP to hire one or more managers of global inflation-linked bonds confirmed State Treasurer Denise Nappier, the principal fiduciary of the $26.1 billion state pension system.
“This search is partly a result of the asset allocation study completed in 2012, which revised the benchmark for the (pension system’s) inflation-linked bond fund to a global index in an attempt to better diversify the risk-return profile of the fund by incorporating inflation rates from non-U.S. markets,” Ms. Nappier wrote in an e-mail response to questions.
The inflation-linked bond fund had assets of approximately $1 billion at the end of February.
Ms. Nappier outlined her RFP plans Wednesday at a meeting of the state investment advisory council meeting. A preliminary outline calls for the RFP to be issued in mid-April with a response deadline of early May. The search is expected to be completed between June and September, and a contract is expected to be awarded in November. The contract would be for five years.
“Once the search is complete, the Connecticut Retirement Plans & Trust Funds will assess the strategic fit of its existing and newly hired managers in order to implement the optimum portfolio construction to meet our long-term risk and return objectives for investment in the global inflation-linked market,” Ms. Nappier wrote.
She noted the inflation-linked bond fund has two domestic Treasury inflation-protected securities managers — Brown Brothers Harriman, whose contract expires in 2020, and Hartford Investment Management, whose contract expires in 2018.