By Russell Read and Steve Moseley

“The State of Alaska is rightly known for its frontier spirit and fierce independence. So it may be surprising to some that we at the Alaska Permanent Fund Corporation attribute strong recent performance in part to the vigour with which we have pursued a strategy of teaming up with outside partners across our $65 billion portfolio. This strategy leverages our institutional strengths (clear mandate, patient capital) and mitigates our weaknesses (small staff, remote location). Partnership is among the most overused (and, too often, abused) terms in asset management. For Alaska, the term has central importance and refers to three categories of partners: fund managers, specialised advisers, and institutional peers. …

… The first category, partnerships with talented fund managers, relies on a critically important task: identifying capable external managers with differentiated skills and sustainable competitive advantages. We seek to team up with these managers to design and implement initiatives that meet their institutional objectives and ours.  …

… The second category of partnership is with specialised advisers and consultants, to leverage our internal team, improve deal flow, and enhance our due diligence and transactional capabilities. This category includes investment consultants and outside counsel, plus more specialised advisers that offer skills or intellectual capital that complement our internal resources. …

… The third category of partnership has the potential to be the most powerful and impactful: joining with like-minded institutional investors to pursue important strategic or tactical initiatives. Many institutional investors believe they are competing with their peers for a finite pool of alpha – and this is sometimes the case; however, there are also several areas where common challenges, common goals, and complementary resources create opportunities to join together and create tremendous value for all participants. …

… The spirit of independence is alive and well in Alaska. We believe that the best outcomes follow from an honest assessment of one’s own capabilities and a clear-eyed view of the obstacles ahead. It is our mission to continue to deliver attractive returns for the benefit of all Alaskans and we intend to do that not by chipping away at the fees we pay along the way, but by teaming up with capable partners for the long journey ahead.”

Full opinion piece is available at Top 100o funds.

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The Alaska Permanent Fund Corporation (APFC) is pleased to announce that it was awarded the recognition as Sovereign Wealth Fund of the Year in Hedge Fund Investments for 2017 at Institutional Investor’s Hedge Funds Awards Ceremony in New York City on Thursday, June 28.  This event marks the second award for APFC’s industry leading investment capabilities after PEI awarded APFC its designation as North America’s Private Equity Institutional Investor of the Year for 2017 this past March.

Angela Rodell, Chief Executive Officer, notes “I am so proud of this group and the international recognition that they received. The Institutional Investor Award reflects the hard work and success of APFC’s hedge fund investment team, which steered the program away from fund-of-funds investments to direct investments into hedge funds two years ago.”

This recognition of APFC’s hedge fund program represents a successful milestone in the reconstitution of the program that began in early 2016.  At that time, APFC Staff with support from our hedge fund consultant, Albourne Partners, and oversight from APFC’s Trustees put forth a new vision for the program.  APFC implemented insourcing of hedge fund selection and portfolio construction that previously was performed by external fund-of-fund partners.  The strategy was further focused in favor of truly uncorrelated managers. Since that time, the new direct hedge fund effort has resulted in significant fee savings and has achieved the stated objective of earning a real return of at least 500 basis-points with minimal correlation to traditional asset classes.

Marcus Frampton, Director of Real Assets & Absolute Return, comments “It took a real team effort to bring an external fund-of-funds approach to hedge funds in house with significant contributions from Legal, Finance and our Investment Team broadly.  It is gratifying to receive this recognition from Institutional Investor less than three years into our new program, however, the real benefit to APFC is the asset allocation flexibility that is provided from having a focused, uncorrelated absolute return program that has the potential to earn attractive returns in a variety of market environments.”

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The Alaska Permanent Fund Corporation (“APFC”) is pleased to announce the launch of a $1,000 million hybrid credit effort named Alaska Direct Alternative Credit (“ADAC”).  Investments in ADAC will include a liquid portfolio of internally managed non-investment grade bonds and ETFs, and a private portfolio of co-investments alongside APFC’s private credit managers. ADAC and the private portfolio will be managed by the Private Income team, including Director Marcus Frampton and Senior Portfolio Manager Jared Brimberry.  The liquid portfolio will be managed by the Fixed Income team, specifically Director Jim Parise and Senior Portfolio Manager Matt Olmsted. …

…“The publicly traded non-investment grade bond portfolio will be managed by our internal fixed income team with the goal of providing a more liquid proxy to the private portfolio, allowing them to be more selective in their co-investments,” said Jim Parise, Director of Fixed Income. “Our long-term track record of outperforming our benchmarks and peers over many market cycles should translate to helping the overall ADAC portfolio achieve its performance goals.”

“The private portfolio within ADAC represents another example of the APFC using its’ scale, strategic external partnerships, and in-house expertise to create a compelling investment opportunity,” said Jared Brimberry, Senior Portfolio Manager. “We are excited to build a diversified credit portfolio alongside top-tier managers, with the benefit of removing an additional layer of fees.”

20180531_Alaska Direct Alternative Credit

The Alaska Permanent Fund’s (Fund) investments gained 8.86% thru the third quarter of fiscal year 2018 (FY18) and the Fund ended March 31, 2018 with assets under management totaling $64.6 billion. The value of the Fund is up $4.8 billion since the start of FY18 despite increased market volatility. …

The value add that APFC staff has contributed through the active management of the Fund is a 1.65% return above the passive index benchmark thus far in FY18, which is equal to just over $986 million in Fund value. …

Download the release at 201805_APFC FY18 Q3 Performance.

“The $65bn Alaska Permanent Fund is creating a supercharged private equity portfolio, writes Alex Lynn” …

“…This is the ultimate model of having a small team of very thoughtful people leveraging their GP network constructively to generate some really interesting dealflow, executing on it and delivering good returns.  They use their resources where they see the opportunity and just get things done – not many people execute and execute well. …”

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