EVOLUTION OF THE CORPORATION
Alaskans voted in the November election of 1976 to establish the Permanent Fund. The Permanent fund received its first deposit of oil revenue the following year, and the Fund’s asset allocation, consisting entirely of bond investments, was controlled by a chairman and board.
In 1980, the Legislature passed Senate Bill 161 creating the Alaska Permanent Fund Corporation (APFC) to manage the investments of the Permanent Fund; it was signed into law by Governor Jay Hammond. APFC was officially established as a state entity and the Board of Trustees was entrusted with oversight of the Corporation and the fiduciary responsibilities of Fund management.
By 1983, the Corporation was functioning as a strong, viable, and independent organization. For the first time, the Trustees were establishing long-term goals for rates of return and were formally developing an asset allocation policy designed to achieve their goals. Investments were being made in U.S. stock and real estate for the first time as the Corporation grew to consist of ten employees. APFC kicked off their Alaska College Internship Program in 1988 as a way for the Fund to help young Alaskans gain entry into the field of finance and investing. International stocks became part of the Fund’s asset allocation in 1989, as the size of the Corporation increased to 18 employees.
In 1994, APFC began managing another fund, besides the Permanent Fund: the Alaska Mental Health Trust Fund. By 1995, the Corporation was putting money into Non-U.S. bonds and had a sizeable staff of about 30. As the Corporation continued to mature, greater emphasis was placed on insulating the management of the Fund from political influence, while maintaining APFC’s ability to remain responsive to changes in state policy and accountable to Alaskans.
In 2004, the Legislature changed state law to require cause before a public member of the Board of Trustees may be removed before the expiration of their four-year term.
Further changes were made as to how the Fund is invested in 2005. HB 215 removed the list of allowed investments from statute and placed it in regulation where it is maintained and amended as needed by the APFC Board of Trustees. Certain key provisions were retained in statute, including the requirement that investments be made under the Prudent Investor Rule.
Between 2012 and 2013 the Board worked to continue the evolution of the Fund’s investments and initiated new programs that would bring international bond and infrastructure co-investments in house. The Board’s amendments to the investment policy came in 2015, and were intended to place the Fund in a smaller number of more concentrated investments to help lower investment costs and prevent over-diversification.
By design, APFC operates a lean organization and outsources to outside professionals as needed to manage, analyze, and monitor investments and returns. With two dozen dedicated investment staff and four dozen total employees located in Alaska’s capitol Juneau, APFC has developed a particular advantage compared with many other institutional plans with its “private markets” investment programs in private equity, real estate, and infrastructure, which also include some of the world’s leading venture capital investment opportunities over the past decade. APFC intends to build upon this historical success by increasing its allocation and portfolio management capabilities to these private markets investments relative to stocks and bonds while maintaining a general level of liquid investments of at least half the overall portfolio.