Bang-Up Fourth Quarter Gives Hawaii Fund Strong '04 Showing

The Honolulu Star Bulletin reported that a strong equity market in November and December helped the Employees’ Retirement System (ERS) increase its portfolio’s market value to more than $9.2 billion. The last quarter advance was the seventh straight positive quarter for the fund and represented the fund’s best performance since it rose 11.2% in the quarter that ended in June 2003.

The fund’s performance last quarter beat its benchmark return of 8.7% and ranked in the top 2% of large public funds for the last six-month and one-year periods. By comparison in the broader markets, the Standard & Poor’s 500 index rose 9.2% in the quarter and the Dow Jones industrial average gained 7.6 %. The tech-heavy Nasdaq composite index was ahead by 14.9%.

The California Public Employees’ Retirement System (CalPERS) , the biggest US pension fund, rose 13.5% last year while US pensions and endowments had investment returns of 11.6% last year, according to a report by Wilshire Associates .

US stocks, which represent 45.7% of the ERS fund, gave the portfolio a big boost in the final quarter with a 10.5% gain. The leaders were mid-cap funds, which rose 13.7%, and small-cap funds, which gained 13%.International fixed income, which comprises 7.3 % of the fund, gained 11.2 % as it benefited by the dollar’s weakness. International equity, which makes up 19% of the ERS fund, rose 15.1% in the quarter but just missed hitting its benchmark return of 15.6%.

The ERS provides retirement, disability and survivor benefits for about 99,000 city, county and state retirees and their beneficiaries.