The Board of Trustees of the Alaska Permanent Fund Corporation (APFC) held a meeting on October 30, 2023 to discuss the strategic planning for the Corporation and the Alaska Permanent Fund. APFC expresses gratitude to Alaskans and stakeholders who provided valuable insights through public testimony during the meeting. We appreciate their interest in the public process and meaningful contributions.

The focus of the meeting was to explore a series of strategic initiatives aimed at growing the Fund and enhancing corporate functionality. During the meeting, the Trustees sought recommendations from staff and advisors and discussed the prioritization of each potential strategic initiative.

Deven Mitchell, Chief Executive Officer, remarks that he “appreciated the conversation about the target rate of return. The ability of the Board to acknowledge and rely on the professionals and consultants – that was impactful.”

The Board maintains the long-standing target return objective of CPI +5% for the portfolio.

Chair Schutt states, “Today’s meeting piqued public interest and may have appeared to be a brainstorming session – but was ultimately a public meeting in action as the Trustees, staff, and advisors debated important topics for the future of the Corporation and the Fund.” He further notes that “none of this is final yet as staff has a bit more work to do to inform the process.”

With further vetting of concepts, the Trustees will take final action on the strategic plan initiatives during the December Board, including-

• Growing the Fund to ensure long-term sustainability and real growth
• A constrained approach to tactical Fund leverage with defined parameters
• Advancing work on key person risk mitigation measures
• Consideration of an Incentive Compensation funding structure for long-term retention of talent
• A long-term vision for expanding APFC’s presence in the heart of financial markets
• Further consideration of the need for Personnel Record Exemptions

APFC’s Board of Trustees approved the following strategic initiatives –

• Enhanced communications to bring together the interests of APFC’s diverse stakeholder groups through a team-based approach that offers statewide, national, and global support.
• Outperformance in the execution of innovative private equity investment strategies through staff expertise and building up the direct investment team.

Allen Waldrop, Director of Private Equity, remarks, “We appreciate the Board’s input into the strategic plan and are looking forward to enhancing our capabilities and deployment approach within the private equity program.”

In discussing measures to support corporate functionality –

• The Board and staff recognized the importance of effective corporate functionality and the need for public transparency. To better serve the mission, the Board discussed measures and ways to support APFC’s effectiveness through improved processes. At this time, APFC will not be pursuing exemptions to the Open Meetings Act and the procurement statutes within the strategic plan.

The next meeting of the Board of Trustees will be on December 13-14, 2023, in Juneau and via webinar.

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The Board of Trustees will meet from 10:30 a.m. – 4:30 p.m. on October 30 in Juneau and via webinar to discuss the strategic plan of the Alaska Permanent Fund Corporation. Agenda topics include:

• Increase AUM to $100 billion.
• Improve corporate functionality.
• Establish a long-term organizational structure plan to accommodate growth.
• Delivering a comprehensive communications plan.
• Review and assess the optimal structure of the Fund.

APFC has been working to establish up-to-date strategic goals and initiatives to gauge progress while setting direction from the Board. The Trustee’s decision-making process, including public testimony and discussions with management, will lead to setting the strategic initiatives through a board vote.

“We’ve been working for several months to identify a list of potential goals and initiatives with a smaller subset of the Board that we expect to be debated and then prioritized by the full Board on October 30″ said Deven Mitchell, CEO, Alaska Permanent Fund Corporation.

“After the meeting, it will be up to staff to implement the direction that’s determined by the Board. We’ll be working to do so in a fashion that adheres to high professional standards and our longstanding commitment to Alaskans.”

You can find the packet and webinar link at Board of Trustees Meetings-APFC.

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The Alaska Permanent Fund Corporation’s (APFC) Board of Trustees will hold a Special Meeting on October 30, 2023 in Juneau at the location identified in the agenda, linked below. The primary topic for the Special meeting is the Corporation’s Strategic Plan. The meeting will also cover committee assignments for the year and meeting locations for 2024 and 2025.

The public is invited to attend this meeting in person, via Webinar, or telephonically (please refer to the agenda). There will be an opportunity for public comment and participation at 10:30 a.m. when the meeting commences. If the public wishes to sign up for public comment, please indicate so when registering via WebEx. If you have any issues registering for public comment, please reach out to Jennifer Loesch (information in the agenda) at least one business day prior to the meeting.

October 30, 2023 APFC Board of Trustees Special Meeting Agenda
October 30, 2023 APFC Board of Trustees Special Meeting Packet – REVISED*

*The meeting packet provides pertinent information on agenda items and informs the Trustee’s policy deliberations. Please note the Trustees will discuss these items during a public meeting and take Board action to direct staff implementation. The Trustee’s decision-making process will lead to setting the strategic initiatives through a board vote.

APFC values the public process and transparency that sets APFC apart as a leading Sovereign Wealth Fund.

The Board of Trustees discussed the long-term strategic plan during the annual meeting last week to set the stage for a special meeting of the Board in October.

The Board is actively working through a strategic planning process that will bring about more opportunities for progress to advance the work of the Corporation as a global investment advisor and grow the Alaska Permanent Fund to meet the needs of Alaska’s future.

It is important to note, as affirmed by our Board Chair Ethan Schutt during this process, that “as a public corporation, we value the transparency that our open meetings bring to the process of investing on behalf of Alaskans. With that comes the reality that our listeners need to recognize and differentiate between the preliminary discussion of ideas vs. acting to moving forward with a final initiative that only happens via board action, that is, a vote.”

A special meeting of the Board has been scheduled for October 30, 2023, to focus on this planning effort and final recommendations. The meeting will be held in Juneau via Webinar.

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From APFC’s Executive Director

As a lifelong Alaskan, I am honored to lead one of the world’s most respected financial institutions, and every time I speak with a fellow Alaskan, I am reminded of the vital role our work plays in improving the quality of life in our state.

The Alaska Permanent Fund was created by Alaskans coming together and voting to amend the Constitution to dedicate, save, and invest a portion of the state’s oil and mining revenue to benefit all generations. As a public endowment, the wealth of the Fund is the responsibility of every resident of the state.

Together, we are obligated to protect it for both today and tomorrow. To do so, we need to understand the history of the Alaska Permanent Fund, its formation, how it works, how it is doing, and its role in the future.

I encourage Alaskans to take the time to gain a deeper understanding of the Permanent Fund. You can do so by reading the Annual Report: Trusted for Generations. Additionally, I encourage you to visit our website, attend public Board meetings, and follow our social media platforms on Facebook and LinkedIn.

As Alaskans, it is our responsibility to respect the contributions of our predecessors, support the current generation, and pave the way for future generations to benefit from the Fund.

Thank You.

APFC 2023 Annual Report

APFC Annual Mtg_Providing for Generations_Opinion

APFC welcomes Ryan Anderson, Alaska Department of Transportation and Public Facilities Commissioner, to the Board of Trustees.

In joining APFC’s Board, Trustee Anderson brings a depth of public service and commitment to serving fellow Alaskans across our State.

Governor Dunleavy appointed Commissioner Anderson to one of the two seats on the Board reserved for heads of principal departments of state government per AS 37.13.050.

The Board of Trustees held a Special Meeting on September 6-7, 2023 to discuss the FY25 budget proposal and upcoming working group initiatives, and an Audit Committee on September 7, 2023 to review the FY23 independent audit report and consider the internal audit functions. The Board also took action to authorize the FY24 budget authority to enter a lease for the Anchorage satellite office.

The directive to open an Anchorage office is part of the Corporation’s 2020-2025 strategic plan and has been publicly discussed in meetings over the past four years. Throughout, the Board has been on record asking for progress on the satellite office. As recruitment and retention have been challenging for many employers, including APFC, considerations have been made to advance and assess tools, including adopting a remote-work policy. Opening an additional office in Anchorage, the state’s largest city will broaden the playing field by providing another option for employees. The Alaska Permanent Fund Corporation’s headquarters will remain in Juneau, our home since 1980.

Given the state’s reliance on the earnings of the Fund to provide more than 50% of the undesignated general fund revenue stream, the Board considered the durability of the Earnings Reserve Account (ERA). Under the current two-account structure, the Principal contains savings that are used for income-producing investments and the Earnings Reserve Account holds the investment income that is available for the legislature to appropriate to support the state’s budget, including essential services and the dividend. The ERA is essentially the checking account of the Fund and it grows through statutory net income which is net realized gains generated through investment activity. Given current market conditions, the amount of income generated through investment activity has decreased compared to previous years. As a result, the spendable portion of the Permanent Fund is being used faster than it is being replenished.

This fall the Board of Trustees is taking on important initiatives to support the ongoing success of the Alaska Permanent Fund Corporation’s investment capabilities, enduring growth of the Permanent Fund as the state’s largest renewable financial resource, and its ability to provide to meet the needs of today’s generation as well as tomorrow’s.

The Special Meeting provided a discussion opportunity and a preliminary vetting of ideas associated with the Board’s long-term strategic planning efforts, the development of Trustee Paper #10, and an overview of the proposed FY25 budget.

• Strategic Planning – A group of volunteer board members will start working with staff and KMD Services & Consulting to establish long-term goals for the Corporation and the Fund. This work will continue throughout the fall, and the resulting plan will provide a strategy for meeting the established goals, as well as clearly communicating the direction to our stakeholders. It is expected that this item will be included on future Board meeting agendas.
• Trustees Paper #10 – A group of volunteer board members will work together with Dr. Malan Rietveld to research, write, and publish a policy paper on the Permanent Fund. As contemplated, the paper will include a history of the Fund, an overview of the Fund’s structure, insights into the durability issues under the current construct, and potential solutions to bring the Fund in line with modern endowment practices. As with former Trustee Papers, this study will anchor the history and policy direction for the Alaska Permanent Fund and the Corporation.
• FY25 Budget Proposal – This budget request acknowledges the importance of APFC’s continuing success as the largest sovereign wealth fund in the US and the 2nd largest per capita globally. Budget resources are essential in ensuring that the Corporation can fulfill our vision of delivering outstanding returns for the benefit of all current and future generations of Alaskans. Accomplishing this vision requires skilled and capable professional staff, discipline in adhering to long-term strategies, and durable resources.

Board Chair Ethan Schutt notes, “As a public corporation, we value the transparency that our open meetings bring to the process of investing on behalf of Alaskans. With that comes the reality that our listeners need to recognize and differentiate between the preliminary discussion of ideas vs. acting to moving forward with an initiative that only happens via board action, that is, a vote.”

The next meeting of the Board of Trustees will be held in Anchorage, Alaska, on September 27 and 28, 2023.

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