Hawaii’s largest public pension fund is facing an uphill battle amid continuing losses in the U.S. and international stock markets.

The state Employees’ Retirement System fund rose 3.2 percent during the final three months of 2015, but that still left the portfolio down 3.1 percent halfway through the fiscal year that ends June 30, according to a report presented to ERS trustees Monday by Portland, Ore.-based Pension Consulting Alliance Inc. The fiscal year had gotten off to a poor start with a 6 percent loss in the July-September period. For the 2015 calendar year, the ERS fund rose just 0.5 percent.

“It’s very likely that the next couple of quarters are going to be volatile and uncertain, and particularly if you look at January, we went down further,” ERS Chief Investment Officer Vijoy “Paul” Chattergy said. “I’m very concerned we could end up with a negative year, but we have to look at the long-term performance of the portfolio to get a better feel of how we’re doing.

“The three-year performance is up 7.8 percent, the five-year is up 7.1 percent and the 10-year is up 5.9 percent, and from the end of June 1990 to the end of December 2015, it’s up 7.7 percent. That’s a long-term number and well beyond my time here, but the three-year and five-year is more meaningful in understanding our performance rather than a single quarter or a single year.”

Through Monday the broad Standard &Poor’s 500 index was down 9.3 percent since January and 9.4 percent over the last 12 months.

The ERS pension plan, which provides retirement, disability and survivor benefits to 118,993 active, retired and inactive state and county employees, had a market value of $14.1 billion as of Dec. 31. That was up by about $243,000 from Sept. 30.

The pension fund is underfunded. As of June 30 it had a shortfall of $8.77 billion, according to the latest actuary report. The portfolio has a funded ratio of just 62.2 percent of where it needs to be to pay all the pensions promised.

Chattergy said the ERS trustees are restructuring the portfolio and have five searches going for new investment managers with different strategies.

“We also intend to do another search for a risk-asset class that has strategies that allow for investment strategies that perform well in volatile markets like the one we’re experiencing now,” Chattergy said. “If we had those strategies today or since July of this fiscal year, we would be performing much better than the way the portfolio is structured now. The message is that I’m satisfied that we’ve been making changes over time, and that’s reflected in the better performance now than in fiscal 2012 when a poor fiscal first quarter was followed by a lackluster second quarter.”

Of the fund’s three major asset classes, domestic equities led the way last quarter with a 6.2 percent gain, followed by international equities, which were up 3 percent. Total fixed income, which includes domestic and international holdings, slipped 0.2 percent. Covered option calls (equities with downside protection) rose 4.2 percent; real estate, which is reported on a one-quarter lag, gained 3.3 percent; private equity, reported on a one-quarter lag, slipped 0.1 percent; and inflation-adjusted returns, which are linked to bonds and timber, declined 0.5 percent.