Hamilton Lane Tapped for Five-Year Private Markets Mandate at Connecticut Pension

Staff put a chart of non-traded BDC redemptions in front of the board, attributing the retail outflows to software and AI exposure rather than any broad credit deterioration.

September 11, 2026

Hamilton Lane Advisors has cleared the last advisory hurdle for a private equity and private credit consulting mandate at the Connecticut Retirement Plans and Trust Funds, the $73.7 billion pension system overseen by the state Treasurer.

The Investment Advisory Council voted unanimously in July to waive its 45-day comment period on the finalist recommendation, brought forward by Deputy Chief Investment Officer Denise Stake and Principal Investment Officer Mark Evans after a competitive search that drew four complete responses. The council’s September 9 meeting in Hartford approved those minutes and took up strategic reviews of all four private market portfolios.

For advisors tracking Hamilton Lane’s registered lineup, the award is a reminder that the firm’s institutional consulting business and its retail product shelf are scaling in parallel. The firm recently expanded registered share capacity across three of its evergreen funds.

What the pension told its board about retail money

The material with the most direct bearing on the registered alts market sat in the reviews rather than in the mandate.

Staff presenting the private credit review gave a full slide to non-traded business development company redemptions, charting quarterly outflows through the first half of 2026 from data attributed to Robert A. Stanger and Co. and the Wall Street Journal. Their reading was blunt: the spike exposed a failure to align investor expectations with the illiquidity of the underlying assets, and it fell hardest on managers reliant on non-institutional capital.

The attributed cause is the more interesting part. Staff tied the redemption pressure chiefly to concern over software sector exposure, and to the way artificial intelligence has reset expectations for software business models and valuations, rather than to any broad weakening of credit fundamentals. Default and non-accrual rates, they noted, sit modestly above long-run averages without pointing to systemic stress.

The private equity review carried a matching caution. New structures and sources of capital, retail and individual retirement accounts in particular, were flagged as a source of conflict around liquidity horizons, terms and exit timing, with co-investment economics expected to evolve alongside them.

The credit review also framed 2025 as a normalization in capital formation rather than a retreat. Fundraising slowed for direct lending specifically while other credit strategies drew more, which staff read as evidence that the opportunity set has widened beyond the corporate lending trade anchoring most retail credit vehicles.

Connecticut’s own credit book sits well away from the strategies that dominate the retail channel:

• Senior credit at roughly 26 percent of net asset value, against 63 percent for the Hamilton Lane private credit benchmark
• Special situations at 38 percent
• Mezzanine at 15 percent

The tilt has worked. The portfolio returned 10.8 percent on a three-year net internal rate of return, ahead of both its leveraged loan policy benchmark and the Hamilton Lane composite.

The exit backlog behind the product boom

The private equity review set out the conditions that have turned secondaries into a growth business. Buyout managers were estimated to be holding close to $4 trillion of unrealized value across roughly 32,000 companies at the end of 2025, and distribution rates, while recovering from a 2023 trough, remain below long-term averages. The underwriting math tightened over the same stretch: large corporate loan yields moved from roughly 6 percent in 2015 to 8 percent in 2025, entry leverage fell from about half a deal to roughly 36 percent, and both entry and exit multiples climbed.

Staff described secondaries as an active portfolio management tool for limited partners rather than a distressed outlet, and pointed to manager-led continuation vehicles and net asset value financing as ways to hold quality assets longer. They attached a condition: managing the conflicts those structures create depends on governance, transparent pricing and alignment of interests.

Connecticut’s own private equity portfolio has lagged. It returned 6.5 percent over three years and 12.9 percent over ten, ahead of the Hamilton Lane all private equity benchmark over five years but behind it over three and ten, and well short of its Russell 3000 plus 250 basis points policy benchmark. Staff attributed much of the ten-year shortfall to inconsistent commitment pacing across the 2013 to 2018 vintages. The manager roster has been cut to 34 from 50 two years ago.

A heavy year of commitments

Alongside the consultant recommendation, the Treasurer disclosed in July commitments of up to 150 million euros to Verdane Edda IV and up to $300 million to WCAS XV in private equity, up to $300 million to Sixth Street TAO Partners in private credit, and up to $150 million to Lion Industrial Trust and $250 million to Artemis Real Estate Partners Fund V in real estate. The council also waived comment periods on IFM Global Value Add Infrastructure Fund and on Fortress Lending Fund V and its companion co-investment vehicle.

Those followed a fiscal year in which the system closed 34 private market commitments totaling roughly $6.2 billion: $2.4 billion to private equity, $1.9 billion to private credit, $950 million to infrastructure and natural resources, and $900 million to real estate.

The pace reflects how far the portfolios still sit from target. Private equity stood at 12 percent of assets against a 15 percent goal, private credit at 6 percent against 10, real estate at 6.5 percent against 10, and infrastructure and natural resources at 3.8 percent against 7.

Where the allocation is heading

A revised policy under review would narrow some of those gaps rather than close them, holding private equity at 15 percent while trimming private credit to 9 percent and real estate to 8 percent, and lifting global equity to 43 percent from 37. General investment consultant Meketa put the 20-year expected return of the proposed mix at 8.4 percent, against 8.0 percent for the current allocation.

Real estate staff have already moved. No further real estate commitments will be made in calendar 2026, allowing unfunded commitments to season and open-end fund redemptions and dispositions to bring exposure down before new deployments resume in 2027. Three commitments totaling $600 million closed during the year against a $1.15 billion pacing target, and roughly $450 million of re-up opportunities with existing managers are anticipated for 2027.

The system returned 15.1 percent for the fiscal year ended June 30, against 14.6 percent for its policy benchmark, and added $11.0 billion in assets. Over ten years it returned 8.8 percent, ahead of a 60/40 public market proxy but behind a 70/30 blend.