As Treasurer Erick Russell marks two years in office, he reflects on the intersection of financial stewardship and social responsibility. Managing $60 billion in assets for Connecticut, he emphasizes that equity and strong financial returns are not mutually exclusive—companies with diverse leadership and ethical practices often perform better. In this insightful conversation, Treasurer Russell discusses Connecticut’s groundbreaking Baby Bonds program, the expansion of the Connecticut Inclusive Investment Initiative, and his vision for racial and economic equity. 

As you mark two years as Connecticut’s 84th State Treasurer, how do you balance integrating social considerations, especially equity, with ensuring strong financial returns for the state’s beneficiaries?  

As Treasurer, my top priority is my fiduciary responsibility to the people of Connecticut. That includes not only teachers and state workers who rely on our pension funds for retirement security, but also students and families who rely on our education trust fund, differently abled individuals saving for varied expenses, and all residents who will benefit from investments that improve housing, educational facilities, and transportation in the state.  

My office currently manages about $60 billion in assets in the Connecticut Retirement Plans and Trust Funds (CRPTF), with the goal of strategically safeguarding those assets and generating the best risk-adjusted returns for beneficiaries. To meet that objective, we assess all potential risks, whether from supply chain disruptions, environmental or geopolitical instability, shifting consumer demand, or other factors. 

Social considerations are not disconnected from that process. Studies have shown that companies with diverse boards and management teams outperform competitors with less diversity on a number of financial measures. We know that companies with discriminatory labor practices, unsafe work conditions, environmental abuses, or poor corporate governance pose a significant financial risk to their companies and, in turn, our pensioners. We take all of that into consideration. 

Recent efforts to limit the prerogative of investment managers and pension funds to consider all the potential variables that can impact investment decisions include asking the SEC and DOL to codify new rules. I’ve joined 16 other state and big city financial leaders to oppose those actions. 

Despite the challenges of this moment, I believe the long arch of human progress continues to bend toward a freer, fairer, more enlightened and interconnected world. As that happens, socially and fiscally responsible investing are increasingly intertwined. We need to fight through this moment to continue that progress – and I believe we will. 

At last year’s RFK Compass Summer Investor’s Conference, Connecticut’s groundbreaking baby bonds program was a hot topic, offering a $3,200 trust for every child born under the HUSKY program starting in July 2023. With the program nearing its second anniversary, what advice would you share with other states or investors considering similar initiatives? 

Connecticut Baby Bonds is a profound example of a program that aligns social and fiscal benefits, and one that by its very nature has the potential to build broad consensus.  By investing $3,200 on behalf of each child whose birth is covered by HUSKY, our state’s Medicaid program, Baby Bonds puts children born in poverty on more solid financial footing and a more level playing field for success in life. Moreover, it creates a ripple effect that will positively impact their communities, their states, and all the lives they will touch.

Baby Bonds funds are placed in a trust managed by my office, ensuring that they compound over time. By the time the child reaches adulthood, the initial investment could grow to $11,000 – $24,000, which can then be used for higher education, job training, homeownership, startup costs for a small business, or retirement savings.  

From an advocacy perspective, it is critical to build broad coalitions of partners. This program received bipartisan support in the legislature, but the program was also supported by local municipal leaders, non-profits, the business community, faith-based organizations and educators. Poverty crosses all demographics, and this support was built with the understanding that baby bonds recipients would be born in every corner of our state, reinforcing that it’s in everyone’s best interest to address long-standing issues of inequity, economic disparity and systemic barriers to wealth-building, especially by lifting up children from marginalized communities. 

At a more practical level, securing funding is critical. We were able to fund this program for 12 years by repurposing excess cash reserves, the result of years of prudent budgeting and sound fiscal management. Administratively, I would urge other treasuries to establish strong partnerships with the social services agencies that have the data needed to identify qualifying families as efficiently as possible. They may also be useful in making recommendations about qualifying criteria earlier in the process.

Finally, I welcome anyone looking to launch a Baby Bonds program to contact my office. We have given several states and municipalities guidance, and we’re happy to share all that we’ve learned. Expanding these programs across the United States, not only affirms the vision of economist Dr. Darrick Hamilton, the pioneer and leading advocate for Baby Bonds, it expands the promise of wealth-building opportunity for disadvantaged families. 

The Connecticut Inclusive Investment Initiative plays a key role in your fiduciary responsibilities, supporting emerging and diverse managers. In light of current market trends, how do you see this initiative positioning Connecticut to take advantage of new opportunities for the next generation of investment leaders? 

Emerging and diverse managers play an important role in our investment strategy and should be part of every return-maximizing strategy. Evidence shows that diverse managers perform as well or better than larger firms, tend to do more with less, and are connected to a unique set of innovators and opportunities in communities often overlooked by others.

Currently, 27% of the assets in the CRPTF ($16 billion), are managed by women- and minority-owned firms. We’ve made significant progress in increasing this participation over the past two years, and we further expanded the Connecticut Inclusive Investment Initiative (Ci3) in January to provide even more avenues for emerging firms that align with our investment principles. 

The results speak for themselves. These managers have contributed to our success in an outsized way, helping us generate an 11.5% return for pensioners in the most recent fiscal year. Each emerging manager brings a unique background and strategy to the table, but all share a common goal: delivering reliable, risk-adjusted returns. Their success is not only a win for Connecticut’s pension fund but also another demonstration that diversity in investment management leads to stronger, more resilient portfolios. Their successes are a testament to confronting barriers to entry.  

Reflecting on Black History Month, what’s your vision for racial and economic equity in Connecticut, and how do you see your leadership shaping that vision over the next decade? 

I grew up in New Haven, Connecticut, where my parents ran a convenience store in a neighborhood struggling with the effects of systemic poverty and inequality. My father opened the store after serving in Vietnam, and he and my mother worked tirelessly to provide for my siblings and me. 

During Black History Month, I often reflect on my father. As a Black man growing up in the post-World War II, pre-Civil Rights South, he experienced firsthand discrimination and inequality that are difficult for us to fully comprehend today. Yet, when his country called, he proudly served. 

My father taught me the importance of hard work, but more importantly, the value of community and our shared responsibility to help one another. These lessons have shaped my vision for what Connecticut can and should be — a state where everyone has equal access to opportunity. 

I’m proud to live in a state that values diversity in all forms, but I also recognize there is much more to be done. I often hear from young people who feel they can’t express who they truly are, and it’s part of the reason I’m committed to amplifying the voices of marginalized communities and creating more opportunities for those who have been historically excluded. I firmly believe that when diverse perspectives are at the table, progress is not only possible, it’s inevitable. Without those voices, policy stagnates, and real change becomes harder to achieve. 

As Treasurer, my leadership will continue to center around ensuring that everyone—regardless of race, background, or identity—has an equal opportunity to succeed. So, for me, Black History Month is a time to reflect on the work and sacrifices so many have made in the pursuit of racial and economic equality, not only in Connecticut, but across our nation, and then recommit to the work that remains ahead to make that pursuit a reality

Before we wrap up, is there anything else you’d like our readers to know about your upcoming plans? And what’s got you most excited as we head into 2025? 

While my responsibility as the state’s fiduciary is top of mind, my office plays a leadership role in many other important areas. We help students and families save for college through the Connecticut Higher Education Trust (CHET). Through our first-in-the-nation Baby Bonds program, we are breaking the cycle of poverty and providing all children with a more equal starting point. We are empowering individuals with disabilities by providing them with the opportunity to establish tax-deferred savings accounts, which help maintain their independence. Most recently, we are appealing to the Connecticut state legislature and working with state treasuries across the country to create a network of Safe Harbor Funds – privately funded, state-led initiatives to help individuals who are being denied reproductive healthcare access in their home states by offering them safe, private, and compassionate care in ours. 

It’s a challenging yet exciting time, and I’m eager to accelerate the progress of these programs in 2025. 

Charting the Course is a monthly series featuring interviews with partners and investors in the Compass Investors network about how they are charting their course to create impact, manage long-term risk, and strive for a more just and humane world.