Hawaii’s largest public pension fund posted a small increase last quarter, but it was enough to push the portfolio’s fiscal-year gain to 20.7 percent, its best return in a quarter-century.

The state Employees’ Retirement System, which provides benefits to more than 112,000 active and retired state and county employees and their families, posted a 1.1 percent return on investments in the quarter ended June 30 to finish the year with a near-record $11.6 billion in assets.

The results reported Tuesday don’t reflect the recent stock market sell-off. The fund’s assets have declined more than half a billion dollars since July 1, ERS Administrator Wes Machida said.

The fund’s highest asset level ever was on Sept. 30, 2007, when it stood at $11.7 billion. The fiscal-year return was the highest since the fund rose 24 percent in fiscal 1986.

The April-June period was the fourth straight positive quarter for the portfolio and the eighth gain in the past nine quarters.

The 1.1 percent return trailed the ERS benchmark of 1.5 percent as well as the 1.3 percent return of 28 median public funds with assets greater than $1 billion.

For the fiscal year the fund’s 20.7 percent return trailed the benchmark of 21.4 percent and the median public fund return of 22.5 percent.

Even the strong gain over the past fiscal year is unlikely to make much of a dent in the state Employees’ Retirement System pension’s unfunded liability, which stood at $7.14 billion on June 30, 2010, the latest figures available. At that time the fund had only 61.4 percent of the money needed to meet future liabilities.

Machida said Tuesday the unfunded liability number will be updated by the end of this year.

ERS Chief Investment Officer Rod June said the ERS board “couldn’t be more pleased with the overall fiscal-year returns given the very dismal markets of just two years earlier.”

The ERS fund’s private equity investments had the best return last quarter with a 9.3 percent gain, while real estate, which is reported on a one-quarter lag, was up 3.3 percent. Total fixed income, which includes both domestic and international holdings, increased 1.8 percent, international equity rose 1 percent and domestic equity had no gain.