Alaska Permanent Fund Board to Authorize Expansion of Internal Efforts
Globally and gradually, sovereign wealth funds and large public pensions are analyzing the benefits of internal asset management. At a recent meeting, the Alaska Permanent Fund Corporation Board of Trustees made some modifications to the fund’s investment policy. Some major changes include the authorization to create three new internally managed programs for public equities, co-investment absolute return funds and co-investment of private equity.
“Over the last 35 years, the Board has taken a deliberate approach to introducing new programs, starting with narrow parameters and leveraging the abilities of external management firms,” said APFC Board Chair Bill Moran via press release. “As the Fund grows in size, it starts to make fiscal sense to bring investments in-house when we feel our ability is comparable to our external managers. If we can match their performance, we can keep our exposure to existing asset classes at target levels while paying lower fees over time.”
The trustees of the Alaska Permanent Fund feel success has been achieved with bringing infrastructure co-investments in-house. They also brought in non-U.S. bonds internally.
The private equity co-investment program will be the first to be implemented. At first the program will use third-party co-investment fiduciaries. After a select period of time, the fund is authorized to embark on co-investments alongside current private equity managers.
Fiscal Year 2014 Commitments
- US$ 250 million – Third-party managed co-investment funds
- US$ 200 million – Internal co-investment alongside current private equity fund investments
- US$ 775 million – Increase in private equity investments adding to the US$ 4 billion commitment
- US$ 400 million – For existing infrastructure funds
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