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Elizabeth Burton
Chief Investment Officer
State of Hawaii Employees’ Retirement System
Elizabeth Burton

Art by Chris Buzelli

After Her First Year at Hawaii ERS

Elizabeth Burton spent 13 years in the industry before stepping into her first chief investment officer role at Hawaii Employees’ Retirement System in 2018. The plan was 55% funded and she rolled up her sleeves and got to work immediately, underwriting the entire portfolio and creating a three-year plan. CIO caught up with her after her first year.


CIO: How has your first year been?

Burton: The first year has been a really exciting challenge—accepting a new role, learning about the plan and its history, getting to know a new team, and moving my family across the country. I have enjoyed getting to know the ERS family and figuring what we need to do to keep the positive momentum going. I am grateful to the board, my staff, and the beneficiaries for this opportunity. We have accomplished a lot in a small amount of time, but I feel like the momentum is just beginning!

CIO: What changes/goals/risks have you been tackling this year?

Burton: My strategy at ERS is to elevate the people, process, and systems. I inherited a great team but I felt that the system could do more to give them access to research, tools, educational opportunities, data, and more paths for growth through new staffing structures and succession planning. We hired a governance consultant to evaluate our current structure and our ability to empower our talented staff; we are wrapping up our findings now. We will be engaging more services in the future to closely evaluate our internal asset class benchmarks to see how we can more closely align them to incentives and, at the same time, align them with both risk and return goals. We have educated the board on new strategies that I believe will be additive to the portfolio at this point in the cycle. We have more initiatives on the risk side planned for next year. Finally, we are growing the team! We hope to double in size over the next few years but we want to do it in a very deliberate process. We are a small team and every “add” matters. I want hungry, humble, and smart, and that’s what we are hunting for.

CIO: What were your first priorities?

Burton: My first priorities when I got to Hawaii were to underwrite the entire portfolio, conduct a gap analysis, and set a three-year strategic plan. The outcome of the gap analysis evolved into (1) a reorientation of staff responsibilities to improve oversight, accountability, and job satisfaction; (2) a business case for increasing resources and tools available to the investment team, and (3) a governance and benchmarking study to improve internal processes. At the portfolio level, I worked with the team and the consultant to identify and consolidate overlapping exposures, introduce new strategies to the portfolio that should improve our profile, and streamline our investment policy to improve efficiency and execution.

CIO: ERS was 55% funded when you took the helm. How do plan to address the underfunded status?

Burton: Well, as you know, funding status is complicated, and it’s a delicate balancing act between contributions and returns. The portfolio is only one part of the equation. We are committed to a portfolio that has a long-term lens, so we aren’t chasing fads or trends. Some of the new strategies I plan to add should help improve the path dependency of returns—which matters tremendously for funds facing lower funding ratios. In addition, we are looking at unique ways to partner with our managers to extract additional value across the portfolio and add alpha in various forms. When looking across financial markets at the moment, there are pockets of really interesting opportunities here and there, but honestly, the best thing we can do is invest in our people. They will generate the highest return on investment for us going forward.

CIO: Before ERS, your career spanned many aspects of finance, from senior economic consultant at Criterion, to managing principal at William Street Advisory, to managing director of quant strategies for Maryland State. In this investment climate, where do you see the most opportunity for growth?

Burton: I see opportunities in alpha strategies. Japan activism looks interesting. Certain pockets of specialty finance not only look attractive but can also add a coupon-like component to the portfolio. Certain pockets of emerging market credit look attractive, particularly from a historical lens. I have said for a few years [that] macro should start to get interesting, but other than systematic, it hasn’t played out that well, with some exceptions—I still hold out hope. I think some discretionary macro, particularly in emerging markets, could start to bear some fruit. 

-By Christine Giordano

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