Hawaii Employer-Union Health Benefits Trust Fund

Investment Strategy

The Hawaii Employer-Union Health Benefits Trust Fund manages approximately $6 billion in assets dedicated to funding health and life insurance benefits for active and retired state and county employees, their spouses, and dependents across Hawaii. Established to prefund the state’s other post-employment benefit (OPEB) obligations, the EUTF plays a critical role in ensuring the long-term sustainability of public employee health benefits.

The trust’s investment strategy is governed by the Board of Trustees, which sets strategic asset allocation targets based on long-term capital market assumptions, projected benefit obligations, and risk tolerance. The portfolio is diversified across global public equities, fixed income, real estate, and a growing allocation to private markets. The investment philosophy prioritizes long-term real returns that exceed the growth rate of healthcare costs, a particularly challenging objective given the persistent upward trajectory of medical expenses.

The EUTF works with external investment consultants to implement its asset allocation strategy, select and monitor investment managers, and provide ongoing risk analysis. The trust publishes annual financial statements and actuarial valuations that detail investment performance, asset allocation, and funded status.

Private Markets Approach

The EUTF’s alternatives allocation, representing approximately 15% of the portfolio, includes commitments to private equity funds and real estate investment vehicles. The private equity program invests across buyout, growth, and diversified strategies through commingled fund commitments. Given the trust’s moderate size relative to the largest state pension systems, commitment sizes are typically in the $25-75 million range.

Real estate investments provide the trust with diversified exposure to property markets, offering both income generation and inflation hedging characteristics that are particularly relevant for a portfolio backing healthcare obligations. The trust invests through commingled real estate funds targeting a mix of core and value-add strategies across U.S. markets.

The EUTF’s approach to private markets is relatively conservative compared to larger pension systems, reflecting both the trust’s size and its specific liability profile. The board has been deliberate in building out its alternatives program, focusing on established managers with institutional-quality track records and transparent reporting practices.

Prospective fund managers should be aware that the EUTF’s investment decisions are made in consultation with external advisors and are subject to board approval. The trust’s publicly available investment policy statement outlines allocation targets and manager evaluation criteria. Given the trust’s size, the EUTF is most likely to participate in diversified fund offerings rather than concentrated or niche strategies.