Hawaii State Pension Fund Returns 3.66% for Fiscal Year 2022

The Hawaii Employees’ Retirement System pension fund reported an investment return of 3.66% for the year ending June 30, beating its benchmark by nearly 500 basis points and raising its total assets to just under $22 billion.

The pension fund has also recently placed ads for a new CIO, just over a month after it named Deputy CIO Howard Hodel acting CIO following Elizabeth Burton’s departure at the end of June.

In its most recent quarterly performance report, Hawaii ERS reported three-, five- and seven-year annualized returns of 9.96%, 8.73% and 8.00%, respectively, while its benchmark returned 7.01%, 6.67% and 6.40%, respectively, during the same periods.

Private growth investments were the top-performing asset class during the fiscal year, returning 29.62%, followed by “liquid defensive” assets, which returned 17.26%, and real assets, which earned 15.41%. Public growth assets were the worst performer during the fiscal year, losing 13.33%.

For the three months ending June 30, the pension fund lost 1.60%, while its benchmark fell 5.35% during the period. Liquid defensive assets were the top performer for the quarter, returning 11.72%, followed by diversifying strategies, which gained 7.48%. Public growth stocks weighed down the portfolio for the quarter, losing 12.10%.

To manage its search for a new CIO, the pension fund has hired local executive recruitment firm Kumabe HR. In late July, the pension fund named Hodel acting CIO retroactive to July 1 to succeed Burton, who resigned after nearly four years as CIO.

As deputy CIO, Hodel oversaw the $7 billion diversifying strategies portfolio and served as the retirement system’s chief risk officer. Hodel had also been the portfolio’s caretaker in 2018 after then-CIO Vijoy Chattergy left and before Burton was hired. Anthony Goo, Hawaii ERS’ investment officer of public markets, was named acting deputy CIO to support Hodel.

In May, when Burton announced she was stepping down, Executive Director Thomas Williams said Hodel is “more than capable of handling affairs during any interim period, or even perhaps permanently.”

According to job postings that appear on Kumabe HR’s website, as well as on LinkedIn and in the Honolulu Star-Advertiser, applicants must submit resumes by September 30 for priority consideration. It also said that the review of applications will begin immediately and will continue until the position is filled.

The postings say that Hawaii ERS is looking for a CIO who will manage the investment activities of the pension fund, provide guidance to the executive director and board of trustees and serve on the executive/administrative team.

“This professional will advance our investment program by providing vision, leadership and strategic planning necessary for ERS to thrive and achieve its goal of sustainability for its stakeholders and beneficiaries,” says the posting.

Among other responsibilities, the job entails developing the strategic plan for the fund’s investment activities, operations and team development; evaluating deputy and investment officer performance; and executing and overseeing investment transactions. The CIO is also expected to develop target asset allocation recommendations for the board and make tactical asset allocation decisions, and supervise ERS investments in public and private equities, public and private credit, duration, real assets, liquid and illiquid alternative investments, overlay derivatives, cash and securities lending.