Alaska Permanent Fund gains, tops $40 billion
August 2nd, 2011 | Alaska Newspapers Staff
National economic woes aside, the Alaska Permanent Fund saw a 20.6 percent return for fiscal year 2011, for a value of $40.1 billion, the third highest return in the fund's history, according to unaudited figures released today.
This marks the first year-end close over $40 billion in the fund's history, and the first time the return has reached over 20 percent since 1986, said Michael Burns, chief executive officer.
"We're very pleased with the Fund's performance this year - it's been an outstanding year and we enjoy the chance to report such good news," Burns said. "But at the same time it's important to remember that the board of trustees and the staff do not chase returns. Our goal is a positive rate of return over the long term, and that's our focus when we build a portfolio that doesn't change in response to short-term market conditions."
Final, audited performance and value information for the fund will be released at the Alaska Permanent Fund Corporation's annual meeting Sept. 29 and 30 in Juneau.
Burns said that stocks were the greatest contributor to the fund's overall performance, with the U.S. portfolio returning 33.4 percent, the non-U.S. portfolio returning 28.7 percent and the global portfolio returning 31.5 percent. The fund's stock portfolio comprises roughly half of the permanent fund's total value.
"These are outstanding returns, especially in light of the challenges that markets faced during this time," said Burns. "A sluggish economic recovery and continued unemployment, Greece and Ireland's debt woes, political upheaval in the Middle East, Japan's earthquake. Yet despite all these hurdles, markets kept moving forward for most of the year."
The fund's real estate portfolio gained 16.9 percent for the fiscal year, reflecting the recovery which finally reached real estate shortly before the start of the fiscal year. U.S. bonds had a solid year, with the fund's portfolio gaining 5.3 percent. Non-U.S. bonds were essentially flat at 0.6 percent, but were ahead of their benchmark return of 0.2 percent.
Alternative assets also added to the positive performance for the fiscal year. The fund's absolute return portfolio gained 8 percent for the fiscal year. This portfolio includes funds that specialize in absolute return strategies, distressed debt, mezzanine debt and other directed investments. The real return portfolio returned 17 percent for the period. This portfolio is comprised of five mandates, with each manager allowed to set their asset allocation within the risk parameters set by the APFC. This allows them to select from the same range of asset types found within the rest of the Permanent Fund.
The fund earned $2.1 billion in statutory net income. This is the value that is used to calculate the annual Permanent Fund Dividend, which will be distributed to eligible Alaskans in the fall. Based on this calculation, the APFC will transfer $800 million to the Permanent Fund Dividend Division for the dividend payment. The dividend transfer for the distribution in 2010 was $858 million.
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