Hawaii’s largest public pension fund began its new fiscal year with a solid 2.5 percent first-quarter return that put it on an early pace to exceed its annual investment target.
The state Employees’ Retirement System, which provides retirement, disability and survivor benefits to more than 135,000 active, retired and vested state, city and county employees, targets an annual 7 percent assumed rate of return to help cover its financial obligations to current and former employees.
ERS’ July-September return was boosted by a 3.4 percent increase from its domestic and international equity growth investments, according to a report presented to ERS trustees Tuesday by Portland, Ore.-based Pension Consulting Alliance LLC. Broad growth comprised three-quarters of the portfolio during the quarter.
Portfolio assets, which include both contributions and distributions, rose $366,772 over the three months to finish the quarter at $16.9 billion.
The quarter preceded the debut of new Chief Investment Officer Elizabeth Burton, who took over on Oct. 1 after leaving her post as managing director of the Quantitative Strategies Group at the Maryland State Retirement Agency.
“It was a good start to the fiscal year for us,” Burton said. “Various parts of the portfolio are performing in line with our expectations and the way it was designed. Growth investments drove the majority of the returns over the quarter.”
Burton replaced acting Chief Investment Officer Howard Hodel, who took on additional responsibility with his risk management position after former CIO Vijoy Chattergy left abruptly in mid-February for undisclosed reasons.
“That (2.5 percent return) is a really nice way way to start the fiscal year, but there’s some geopolitical stuff and … it’s not going to be an easy environment going forward,” said Neil Rue, managing director of Pension Consulting Alliance. “It’s clearly a challenge to meet the 7 percent bogey year in and year out, and there’s definitely uncertainty the fund faces.”
The pension fund is coming off a fiscal year in which it achieved a a 7.7 percent investment return for the period ended June 30.
That return is expected to help the ERS take a step toward narrowing its $12.93 billion shortfall that left the fund just 54.9 percent funded at the end of fiscal 2017. Dallas-based actuary Gabriel Roeder Smith is expected to release a draft report for fiscal 2018 in December and a final report in January.
ON THE MOVE
American Savings Bank has hired the following new employees:
>> Manuel August Jr. is the new senior residential loan officer for American Savings Bank. August has 16 years’ experience in the financial industry, including having served as a mortgage division area sales manager for a national financial institution as well as a certified public accountant for one of the largest accounting firms in Hawaii.
>> Kiki Kise is the new residential loan officer for American Savings Bank. She joined ASB after working for three years in the mortgage industry at a national lending company. Kise served much of her career in the financial industry and started in securities trading in Tokyo.
The East-West Center Board of Governors has reappointed Richard Turbin as chairman for another year. Turbin has been a member of the board since 2011 as well as an attorney in Honolulu for 40 years and currently a partner at Turbin Chu Heidt law firm.
