Alaska Permanent Fund Corporation Remains Diligent

In Uncategorized by Paulyn

Alaska Permanent Fund Corporation Remains Diligent

As the public equities markets head into ‘bear market’ territory, APFC remains diligent in our management of the Alaska Permanent Fund and in fulfilling our obligations to Alaskans.

APFC’s team is navigating through the market downturn by looking into this period of uncertainty to find opportunities that will bring long-term benefits during the recovery phase.  APFC’s investment strategies have been reaffirmed as the diverse asset allocation has provided some relief in offsetting the significant drops in public equities performance.

Angela Rodell, Chief Executive Officer, notes that – “We recognize this is a very scary time for everybody. There is a lot of concern for Alaskans, our local and state economy, and both the emotional and economic toll this virus is taking on all of us. I want to assure Alaskans that the Fund continues to be a source of stability. Yes, we have taken losses, but the diverse mix of assets along with our long-time horizon means we are keeping to our commitment to provide a stable source of revenue for Alaskans to rely on.”

The Total Value of the Fund at the beginning of this Fiscal year on July 1, 2019 was $66.3 billion, and six months into the fiscal year had reached a value of $66.9 billion.  The market close on March 12 took the Fund value to $59.9 billion.

The cumulative effect of this month’s volatility on the ERA balance will be available when the March financial statements are published. The ERA balance cannot be calculated until all investment accounts have been reconciled and closing entries made. The March 31, 2020 financial statement will be available mid-April and will include values for the Principal and ERA based on that closing date.

APFC recognizes the essential role that the Alaska Permanent Fund holds in providing a dependable and stable revenue stream for the State of Alaska.  The FY20 $2.9 billion percent of market value (POMV) distribution to the state general fund has been fulfilled, and the FY 21 commitment to distribute $3.1 billion under the POMV formula will be met based on current holdings in the Earnings Reserve Account.

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APFC’s Board of Trustees Brings Forth Recommendations for Fund Sustainability

In Uncategorized by Paulyn

The Alaska Permanent Fund Corporation’s Board of Trustees held a special meeting on March 5, 2020, to further their recommendations pertaining to the Earnings Reserve Account.

The Board of Trustees passed Resolution 20-1 OFFERING ALTERNATE PROPOSALS TO SUPPORT AN ANNUAL PERCENT OF MARKET VALUE DRAW FROM THE PERMANENT FUND. The Resolution brings forth measures to enhance the sustainable use of the Fund’s earnings and improve the durability of the Earnings Reserve Account.

Resolution 20-1 is intended to inform the debate on the structure, and use of the Alaska Permanent Fund for all generations of Alaskans. It includes the following for consideration: a constitutional or statutory change to combine the ERA and corpus, or an adjustment to the existing structure, including a periodic review of Fund return assumptions and an adjustment to transfers from the ERA to the Principal.

In passing this Resolution, Chair Richards notes that “the risk of the Earnings Reserve Account being unable to make payments to government or to fund the dividend over a ten- or twenty-year period is quite high.  It is important that the State put in place a structure that minimizes that risk before a series of bad market events results in payment shortfalls. The Board has passed a resolution recommending practical changes to the Permanent Fund’s structure to minimize that risk.”

20-01 APFC Resolution POMV Support

APFC Positioned The Fund To Weather Market Volatility

In Uncategorized by Paulyn

Juneau – As widely reported and followed, the global stock markets were rocked this past week with double-digit declines across the board, driven by escalating COVID-19 fears and indications that efforts to contain its spread have been ineffective. Fortunately, the Board of Trustees has structured a well-diversified portfolio for the Alaska Permanent Fund (Fund) with a mix of both public and private assets to mitigate market volatility over a long-term investment horizon.

APFC entered this week very conservatively positioned with an overweight in our asset allocation to bonds and cash, which has provided an opportunity to leverage opportunities based on market dislocation.  Reflective of APFC’s conservative positioning, through Friday, February 28, the Fund declined ~2.4% in February vs. a decline of ~5.5% for the Fund’s Passive Benchmark.  The primary driver of the market declines this past week has been the fears about COVID-19.  As we begin this trading week, markets are rallying, given the Fed statements that they will support the market.  However, there remains a great deal of turbulence with the recognition of the damaging potential of this virus on the global economy.

Despite a state of panic enveloping the markets last week, there was some good news in APFC’s private markets portfolio.  The Fund has exposure to several innovative biotech companies in the Venture Capital portion of the portfolio that are positioned to assist in response to a variety of public health crises. Within the Fund’s Alternatives portfolio is a multi-billion dollar Absolute Return portfolio, which performs with no material correlation to the broader markets.  Early data on manager performance indicates that this portfolio served its intended role last week.

Marcus Frampton Chief Investment Officer remarks, “Given elevated valuations prevalent in public stock markets and the team’s assessment of the risk/return tradeoff in markets, the Fund has been positioned more conservatively than normal going into February.  While a drop-in value is always very difficult, I’m gratified that the team’s positioning of the portfolio served us well last week in a tough market. In this challenging market environment, the Fund has performed well, and we are positioned to weather any future volatility.”

APFC’s CEO Angela Rodell offers, “APFC is a long-term investor.  This market will recover.  It may not be in the timeframe we all would like, but history tells us these events do not last indefinitely. We have seen tough losses before and have been able to recoup and actually build an even stronger base.  Our team at APFC is working hard to find the new opportunities this market provides while limiting the downside of the Fund.”

The February 29, 2020 financial statements are in the process of being compiled and will be issued in the coming weeks with updated information on the overall Fund values, including those for the Principal and the Earnings Reserve Account.

The full news release can be found here: 2020FEB28_Market Volatility

APFC Requests Productive Dialogue

In Uncategorized by Paulyn

Alaska, the 49th state, is an Arctic state that relies on responsible resource development, and it was disappointing to learn of JP Morgan’s decision to restrict its investment decisions in the Arctic.

The Alaska Permanent Fund (Fund) was created by Alaskans to save and invest a portion of the state’s resource wealth. Every year since inception, at least 25% of the royalty payments that are generated by resource development in Alaska gets deposited into the Fund and will remain there in perpetuity.  As a successful model for converting non-renewable resource wealth into a renewable revenue source, the Fund has grown from the first royalty deposit of $734,000 in 1976 to more than $65 billion. Today, the Fund is invested in assets and markets around the world.

As the investment manager of the Fund, the Alaska Permanent Fund Corporation (APFC) relies on external investment managers and financial service providers, like JP Morgan, to access global markets to both enhance and diversify the Fund’s returns.

Because our mandate is to prudently invest Fund assets to generate returns that will benefit all generations of Alaskans, APFC will continue to partner with firms, like JP Morgan, to achieve that mission. However, it is important that our partners understand us. We encourage our colleagues to take the time to understand Alaska, its complexity, and its economy. APFC looks forward to having a productive dialogue with all of our partners and peers that ultimately benefits not just Alaskans but all of us who rely on the Arctic.

 

Special Telephonic Meeting of the Board of Trustees

In Uncategorized by Maggie Meiners

The Alaska Permanent Fund Corporation (APFC) will hold a special Meeting of the Board of Trustees on March 5, 2020 telephonically. The public is invited to attend this meeting by webinar; please see the agenda (linked below) for information.

Agenda item is limited to discussion and action on a board resolution that provides recommendations regarding the structure and balance of the Principal and Earnings Reserve Account in light of the Percent of Market Value draw enacted in 2018 in SB 26.

 

Agenda

20200305 Special Meeting Packet

 

The APFC Board of Trustees Recognizes Fund’s Evolving Role

In Uncategorized by Paulyn

The Board of Trustees held its quarterly meeting in Juneau, Alaska on February 19-20, 2020 to review the performance of the Alaska Permanent Fund through the first half of the fiscal year 2020 (FY20), to consider the current asset allocation and investment policy, and to discuss the structure of the Fund.

The Alaska Permanent Fund’s investments were up 5.38% in value during the first half of the fiscal year 2020 and up 15.71% in the 12-month period for the calendar year 2019. Returns for each asset class and their respective benchmarks are available under Performance.

In building upon the recommendations brought forth in the Trustees’ Paper Volume 9 released in January of 2020, the Board of Trustees evaluated the structure of the Fund and its ability to meet the expectations of providing both enduring intergenerational growth and reliable income-generation functions. Based on the Board’s direction, policy recommendations will continue to be developed and brought forth at a later meeting for consideration

Chair Craig Richards remarked that “the separation of the Permanent Fund into two accounts, the Principal and the Earnings Reserve, is a historical artifice of 1970’s accounting concepts. As the Board heard today, not having a single fund creates an approximately 50% chance that the Permanent Fund will not be able to fund the POMV distribution including dividends, in one or more years over the next 20-year period.  Ideally, we will work toward legal changes that combine the two accounts.  Alternatively, we must have a clear strategy to maintain a robust ERA balance during down market cycles.”

APFC was pleased to welcome Senate President Giessel and Speaker of the House Edgmon to the meeting together with Senator von Imhof and Representatives Foster, Johnston, and Kopp.  Legislative support for the work that the Board of Trustees and the APFC Staff are doing to manage and invest the Fund is essential for our continued success. In working together, we will build on the legacy established over the past 40 years and provide renewable financial resources for Alaskans to benefit from for the next 40 years and beyond.

In summary of the two-day meeting, Angela Rodell offered: “My takeaway for Alaskans is this meeting highlights the effort that the Staff and Trustees continue to make in balancing the needs of our State and current generation while ensuring we have a robust asset to benefit future generations of Alaskans.”

The next quarterly meeting of the Board of Trustees will be held on May 20-21, 2020 in Kenai, Alaska.

 

2020FEB_APFC BOT Quarterly Meeting FY20 Q2

In Uncategorized by Maggie Meiners

APFC Quarterly Board of Trustees Meeting

The Alaska Permanent Fund Corporation (APFC) will hold its Quarterly Meeting of the Board of Trustees on February 19-20, 2020 in Juneau, AK. The public is invited to attend this meeting in-person or by webinar; please see the agenda (linked below) for information.

Agenda items include: asset class updates from real estate and alternatives, a performance review of the portfolio from Callan LLC, as well as presentations on the earnings reserve account, APFC’s asset allocation strategy, and investment policy.

 

Agenda

Packet

 APFC congratulates CIO Marcus Frampton, CFA, CAIA, FRM on being recognized amongst Chief Investment Officer Magazine’s Power 100 of 2019

In Uncategorized by Paulyn

In this 8th edition of the Power 100 list, the publication lauds “asset owners who have distinguished themselves in navigating a changing, and often perilous, market landscape.” This recognition factors in the contributions and qualities that CIOs bring forth for the ongoing success of the portfolios they oversee, the relationships they cultivate, and the teams that they develop.

The 2019 Power 100 | Chief Investment Officer

8th Annual List of the World’s Top CIOs

Congratulations Marcus on this deserved honor!