OHA trustees hear Mixed Results in Native Hawaiian Trust Fund: strong year but weak final quarter

Ryan Lee, endowment director, presented the Native Hawaiian Trust Fund performance to the Office of Hawaiian Affairs (OHA) Board of Trustees, reviewing the quarters ending Sept. 30, 2024 and Dec. 31, 2024.

Lee said the trust produced a 4.5% return for the quarter ending Sept. 30, 2024, closing that quarter with a market value of $606,000,000 and a 12‑month return of about 19%. For the quarter ending Dec. 31, 2024, Lee reported a market value of $595,000,000 and a total return of negative 1.2% for that quarter. For the full calendar year 2024, he said the fund returned about 10.5% and the 10‑year annualized return is about 7.1%–7.3% depending on the exact measurement period.

Lee attributed the earlier quarter’s strength to broadly positive public‑market performance and said U.S. equities — particularly large-cap “mega cap” names — led returns in late 2024. He said private markets have lagged because valuations are reported on a delayed basis and “over time, the valuation tends to narrow,” adding that OHA has begun making commitments that put capital to work in private markets.

Trustees asked several clarifying questions during the presentation. A trustee asked whether the reported market values included land assets; Lee answered, “It does not. It’s just financial assets.” Another trustee asked whether the underperformance versus benchmarks (including consumer price index comparisons and the policy benchmark) was cause for concern. Lee said the board’s long‑term objective is to exceed CPI plus a target margin (described in the presentation as an approximately 8% long‑term objective) to preserve intergenerational equity and purchasing power; he described the recent 10‑year inflationary environment as a factor that made short‑term outperformance more difficult.

On implementation, Lee said trustees previously approved an updated investment policy statement (IPS) and a private‑market commitment budget. He said trustees approved a $15,000,000 commitment to a secondary private‑markets fund in the prior quarter, and the manager issued a capital call that funded $4,200,000 of that commitment, which is now invested in private markets. Lee described the asset allocation as “within compliance” with targets and ranges shown in the presentation and said staff will continue adjustments to reach long‑term private‑equity targets.

Lee also described plans to revisit the trust’s spending policy related to Hawaii real‑estate holdings. He explained the current spending calculation is based on a percentage of market value (for example, “5 percent of that should be accounted for spend”), but that approach may not reflect actual distributed income from real‑estate holdings. He said the proposal is to amend the spending policy to allow distributions based on net distributed income from property, rather than an assumed percent of market value, to better reflect cash flow available for spending.

Trustees and staff discussed timing and market uncertainty following federal policy changes and the U.S. presidential election; Lee said the strategic asset allocation is intended to be long term and that staff will evaluate tactical adjustments as market clarity emerges. He also noted that private‑market commitments may be funded over multiple years and that secondary fund investments can result in earlier capital calls when managers already have invested portfolios.

The presentation closed with trustees asking that future updates include implementation timelines for spending‑policy changes, planned private‑market allocations, and continued details about capital calls and commitments.

Votes at a glance

A procedural motion to adjourn was moved and passed by roll call at the end of the meeting (motion text and roll‑call recorded in meeting minutes).