Sovereign Wealth Fund Institute

In 1976, the State of Alaska amended its constitution by voter approval to create the APFC. In 1981, the actual administrative expenses were totaled at US$ 165,000. The market value at the time of June 30, 1981 was US$ 1,794,439,000.

According to the press release, “The Alaska Permanent Fund Board of Trustees approved new Board Charters and a Governance Policy, as well as an updated Investment Policy at its regular meeting on Wednesday and Thursday. The new documents incorporate a number of existing policies and charters into two streamlined documents that will hold all of the related information together.

“In the past we had a handful of resolutions that addressed the management of each of our asset classes and were separate from the manual on how we invested. We also had separate board charters, as well as governance procedures that were not codified in writing,” said Board Chair Steve Frank. “By pulling together these two documents, it will make our policies and procedures more transparent, and provide a great deal of benefit to incoming Trustees.”

For the most part, the new policies do not represent significant changes from past practices. However, the updated investment policy does delegate the Board’s authority to authorize the hiring and firing of managers to staff.

“This change makes sense and is in line with how similar funds operate,” said Frank. “The Board must first authorize a manager search, but then we leave the hiring of managers to the staff that have the time to conduct due diligence visits and comb through performance data.”

In addition to approving the new policy documents, the Board also took the following actions:

• Approved a $600 million commitment to private equity investments for Fiscal Year 2011 as well as authorizing use of the remaining $250 from the Fiscal Year 2010 commitment in the coming year.
• Approved the APFC’s Fiscal Year 2011 budget as authorized by the Legislature, and authorized changes within the Fiscal Year 2010 budget for the remainder of the current fiscal year.”

Read more: APFC Press Release

“The Alaska Permanent Fund Corporation Board of Trustees authorized a new asset allocation and approved a manager search during their regular meeting on May 20 and 21 in Anchorage.

‘We’re taking a fresh approach to how we view our asset allocation,’ said Michael Burns, CEO ‘We’re recognizing that some investments within an asset class may have more in common with other asset types with regard to expected risk and return. And since our goal at the highest level is to balance the risk and return of the total portfolio, it makes sense to segregate assets by their characteristics, rather than simply by type.’

The new asset allocation is as follows:

2% – Cash (investments with a duration of less than 12 months)
6% – Interest rates (government or government related bonds)
53% – Company exposure (stocks, corporate bonds and private equity)
18% – Real assets (Real estate, infrastructure and TIPS)
21% – Opportunity pool (includes absolute return and distressed debt)

The allocation includes real return mandates, a new asset allocation for the Permanent Fund. In the Fund’s absolute return mandate, managers generally focus on publicly traded assets, such as stocks and bonds. Under a real return mandate, managers would invest in the same range of assets as the Permanent Fund. They would be required to structure their portfolios to meet a 5% real return target with a same level of risk as the full Permanent Fund portfolio.”

read more: APFC

The Alaska Permanent Fund Corporation Board of Trustees hired State Street Global Asset Managers for a $700 million passive global mandate on January 14. The mandate was previously managed by UBS Global Managers. During the teleconferenced meeting, the Board also took the following action:

Amended the APFC’s equity investments resolution to include the Morgan Stanley Capital World Index as the benchmark for global passive managers.

Transferred the distressed debt portfolio managed by Crestline Investors, Inc. from domestic fixed income to the absolute return strategies asset class. The Trustees determined that the portfolio’s characteristics made it more naturally fit in the alternative assets portfolio.

Changed the short-term interest rate proxy for CDs purchased through APFC’s Alaska CD program from U.S. Treasury Bills to the short-term rate published by the Federal Home Loan Bank of Seattle. This ensures that the Permanent Fund is receiving fair compensation for its investment, while providing liquidity to the Alaskan economy through the state’s banking system.

read more: Alaska Permanent Fund Corporation