DIVERSIFICATION FRAMEWORK — ASSET ALLOCATION
The Alaska Permanent Fund Corporation has an asset allocation that is approved by the Board of Trustees, reviewed annually, and designed to deliver risk-adjusted returns over the long term for the benefit of Alaskans. When considering the asset allocation, the Board does not try to time markets or focus on short-term market conditions. Instead, the Board engineers a portfolio that will provide a diversified and compelling long-term return under a variety of potential market conditions.
The fund is invested globally across public and private assets which include growth and income objective strategies. Organizing by objective and liquidity reflects APFC’s focus on increasing the efficiency of its portfolio, identifying return targets commensurate with the risks undertaken for each investment. The asset allocation structure defines seven asset classes —(1) Public Equities, (2) Fixed-Income Plus, (3) Private Equity & Special Opportunities, (4) Real Estate, (5) Infrastructure, and (6) Absolute Return Strategies, and (7) Allocation Strategies. The goal is to have well-diversified investments that distribute risk and generate the highest possible return within the mandate given by the Board of Trustees.
ASSET ALLOCATION STRUCTURE
- Public Equities (Stocks)
- Private Equity
- Absolute Return
- Allocation Strategies
- Fixed Income Plus (Bonds)
- Real Estate
Strategic Performance and Risk Benchmarks are set by the Board of Trustees and are an integral part of managing the Fund as they allow for the evaluation of asset class performance and monitoring of risk relative to passive and peer comparisons. The benchmarks are representative of the long-term average return and asset class weightings based on the Board’s objectives for the portfolio.
APFC has an active risk management process that enhances the Board of Trustees’ ability to establish a tactical asset allocation. APFC ’s investment staff have the broad authorization and flexibility to pursue investments within established ranges set by the Board of Trustees. This competitive advantage allows staff to make strategic and efficient investment decisions beyond what is provided within select benchmarks.