The State of Hawaii Employees' Retirement System (ERS) has replaced its two emerging markets managers as it continues to adjust its portfolio, Mena FM has learned.

The $11.5bn system, which has a total emerging markets equities exposure of 3-5% has replaced Acadian Asset Management and Rexiter with Quantitative Management Associates and Research Affiliates, according to administrator Wesley Machida. 

The system is currently searching for a new investment  consultant, a move which may result in a further adjustment of its overall portfolio. The ERS currently uses pension consultant Alliance as its generalist investment consultant but this contract is due to expire at the end of 2011.   

Machida told Mena FM that the ERS currently takes emerging markets exposure only through its public equities and fixed income mandates but intends to look more closely at private equity, including emerging market private equity, increasing its overall exposure from 2% to 7%.

A source familiar with the ERS' plans, who asked not to be named, told Mena FM that it has "marginal holdings" in the Mena region at present, but is open to investing in the region in the future. "We could have a conversation about that," he said. "We're not holding back from the region but our managers have not necessarily forced this exposure. We are interested in Africa and the Middle East." He added that the ERS has met with Mena managers in the past.   

The Hawaii ERS conducts asset liability studies every three years, with the next study due to take place in 2012 or 2014. Machida added: "No material changes to the asset class targets are anticipated within the next three years unless the asset/liability study indicates changes should be made."