Elizabeth Burton, Chief Investment Officer of the Hawaii Employees Retirement System (HIERS), discusses her management of the pension’s $21 billion in assets with DoubleLine’s Jeffrey Sherman, Deputy Chief Investment Officer, and Samuel Lau, Portfolio Manager. Among other issues, Ms. Burton discusses her objective as CIO (3:57) “to achieve our target return within the given level of risk the board sets out, which would be 7% target return…. At the end of the day, the Number One thing I have to do is protect retirement benefits.” That task, she says, is “getting more challenging,” particularly given the prospect for higher inflation. Whiles HIERS a couple years ago increased its private equity allocation from 6% to 13%, she does not anticipate a further increase given signs of froth in that asset class (17:36). “I don’t want to call a bubble here,” Ms. Burton says, “if you look at the definition of a bubble, there’s a lot of signals that might be happening.”
Regarding her macroeconomic outlook (33:54), Ms. Burton doubts inflation will be “transitory. I do think it’s a little bit longer lasting. I don’t have a ton of faith in the Fed to reign it in.” She expects the “helicopter money,” and its flow into the equity market, to persist longer than many people expect (42:38). “My concern’s more on the regulatory side. What is this administration going to do if this does go south?”
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