Hawaii’s largest public pension fund — the Employees’ Retirement System — had a healthy 4.5 percent gain in the July-September quarter which boosted its assets to an all-time high of $15 billion.

Global equity and bond markets, as well as real estate investments, provided the catalyst as assets rose nearly $1 billion from the end of the previous quarter, according to a report presented to ERS trustees Monday by Portland, Ore.-based Pension Consulting Alliance Inc.

“This was a strong quarter,” said Chief Investment Officer Vijoy Chattergy. “We’ve begun to restructure our portfolio so that the kind of risks that we’re exposed to in the marketplace are less than we had previously. The investments are more diversified, more transparent, and they do better in more volatile environments. And it’s being done at lower fees, a lower cost structure than we had before.”

The ERS portfolio’s 4.5 percent return beat the 3.8 percent return of 65 median public funds with assets greater than $1 billion. The return also beat the ERS portfolio’s 3.1 percent benchmark return, which is a combination of different indexes that correspond with the underlying strategies of the ERS investments.

The ERS portfolio is used to pay retirement, disability and survivor benefits to 118,993 active, retired and inactive state and county employees.

Like many pension funds nationwide, the ERS has been under pressure to improve performance to help make up a shortfall that totaled $8.77 billion as of June 30, 2015. The ERS follows a July-to-June fiscal year.

While the July-September results put the pension fund on an early pace for a good year, ERS Executive Director Thomas Williams acknowledged that the 0.9 percent investment loss in fiscal 2016 will increase the fund’s unfunded liability, or the amount needed to pay future benefits. The ERS pension fund had only 62.2 percent of the amount it needed to pay all the pensions promised as of June 30, 2015. If it was fully funded, the ratio would be 100 percent. Dallas-based actuary Gabriel Roeder Smith &Co., which updates the figures annually, will provide new figures next month for the fiscal year that ended in June.

“Certainly the investment performance impacts the unfunded liability positively or negatively,” Williams said. “And to the extent that it underperformed the assumed investment rate (of 7.65 percent set by the ERS trustees), it will have a negative impact. But the focus of ours is the longer term. We wish all the investments were a straight-up trajectory, but that’s not the case. We’re making some modifications in our portfolio to be more positive in the longer term.”

Williams also said ERS trustees are considering adjusting lower the assumed rate of investment return, which is targeted for 7.55 percent for the current fiscal year, which ends June 30, and 7.5 percent for fiscal 2018.

“The board routinely considers its assumptions as it relates to both economic factors like the long-term return as well as demographic factors like mortality,” Williams said. “The near-term forecast for the market is for the returns to be somewhat muted. Our board may very well change our long-term assumption to go below the 7.5 percent that’s already been approved. When there is a lower investment return assumption, that increases the liability, and hopefully you earn more over time or you have to put in higher contributions.

“While the investment return assumption is one of the things impacting the cost of the plan, one of the things that we know is having a great effect on our unfunded liability is the mortality assumption. The life expectancy of our members in Hawaii is the highest in the nation, which means we have to pay our members over a longer period of time.”

By major categories the portfolio’s broad growth investments (equities, option-writing strategies, private equity, private real estate and fixed income corporate bonds) gained 5.5 percent last quarter while principal protection investments (fixed income government bonds) rose 1.1 percent and inflation-adjusted investments (inflation-linked bonds) increased 1.7 percent. Real estate, which is part of the broad growth category and is reported on a one-quarter lag, rose 2.4 percent for the April-June quarter and was up 13.5 percent over the 12 months to June 30, representing the largest gain of any of the ERS asset classes. During the 10-year period ended June 30, 2015, the ERS real estate portfolio rose 9.9 percent to finish second among 64 major state pension plans, according to a survey by Cliffwater LLC.