The Connecticut State Capitol in Hartford
The Connecticut State Capitol in Hartford, shown in January 2020. Credit: Doug Hardy / CTNewsJunkie

HARTFORD, CT — Connecticut Treasurer Erick Russell has released a quarterly update for the Short-Term Investment Fund (STIF), revealing that the fund outperformed its benchmark during the quarter and over a one-year period, earning millions in interest for state and local governments.

STIF serves as an investment vehicle for cash held by the state, its agencies and municipalities, and other political subdivisions including quasi-public agencies. Its objective is to generate returns while protecting principal investments and maintaining liquidity so accountholders can instantly access money for cash-flow purposes.

For the quarter ending March 31, 2023, the fund earned 4.56%, 0.18% higher than similar funds measured by the iMoney Net benchmark, an independent data analysis tool for money market funds. This performance resulted in interest earnings of an additional $9.7 million. Over the past year, the fund earned 2.85%, reflecting a 0.20% outperformance versus the benchmark, with additional interest earnings totaling $33.9 million. The current STIF rate of 4.9% is higher than at any point in the last 15 years.

“The Short-Term Investment Fund is an essential resource, especially for local governments, and I’m pleased to see it continue to live up to its promise,” Russell said in a written release. “At a time when there is nationwide attention being paid to stability in the banking sector, the fund is providing a dependable and effective option to safeguard the money of taxpayers and generate interest earnings for Connecticut’s cities and towns.”

STIF held no investment in the banks under the greatest strain during the recent run of failures, including Silicon Valley Bank, Signature Bank, and Credit Suisse. Because of its focus on liquidity, the release said, the fund takes a cautious approach to its investments, limiting its bank exposure to the largest, best-capitalized financial institutions.

The fund is managed by the Office of the Treasurer, utilizing the agency’s various divisions for insight into the markets, securities, and entities in which it invests. Representatives from the office have been meeting with municipalities to raise awareness of the fund and directly answer questions, most recently presenting at an April meeting of the Government Finance Officers Association of Connecticut.

“I’m fortunate to have such skilled and dedicated colleagues working to ensure this fund is fiercely protecting the investments of municipalities, the state and other accountholders,” Russell said. “The Short-Term Investment Fund is a great example of how we can utilize the talent and expertise of the agency to support taxpayers across the state. I look forward to its continued success.”