The mission of the Alaska Permanent Fund Corporation (APFC) is to maximize the value of the Permanent Fund within return objectives.
- Achieve the target return within acceptable risk parameters.
|Mission Results||Core Services|
|A: Result - Maximize the value of the Fund|
|A1: Core Service - Achieve the target return within acceptable risk parameters.|
Target #1: The Fund's rate of return meets or exceeds the composite investment performance benchmark adopted by the Board
Permanent Fund total return versus Benchmark return
Analysis of results and challenges: At 6.3 percent total return, FY2019 results were not as strong as the 10.74 percent of FY2018, but are substantially above the mid-point of the range of returns since 1985. Total returns have ranged from -18 percent to 25.58 percent. In the past eleven fiscal years alone returns have ranged from -18 percent to 20.6%, seen in the chart.
In FY2019, the total Fund outperformed the Passive Index Benchmark by roughly 1 percent, which represents $473.7 million. Extending the term to five years over the Passive Index, the value added over the benchmark increased to 2.4 percent or $6.2 billion. This growth can be attributed to the APFC staff generating higher returns through active asset allocation and portfolio management.
The Percent of Market Value (POMV) methodology for Fund withdrawals was established in statute (SB 26, CH16 SLA 18). The POMV rules-based structure allows for an annual draw from the Fund of 5.25 percent for FY2019-FY2021 (stepping down to 5 percent in FY2022) based on the average market value of the Fund for the first five of the preceding six fiscal years.
• This draw is subject to annual appropriation by the Legislature and can be used for any state government service or program, including the dividend program.
• The POMV draw for FY2019 was $2.7 billion, and was appropriated to the general fund for government services and the payment of the dividend. The draw from the ERA represented 42 percent of total general fund revenues.
• The POMV is designed to create a known and manageable withdrawal structure from the Fund to provide benefits for both current and future generations of Alaskans.
Our passion to cultivate Alaska’s global investments helps to maintain APFC’s esteemed international reputation as innovative leaders in our field. As hosts of the International Forum of Sovereign Wealth Funds in Juneau, on September 10-13, 2019, we proudly shared our knowledge and expertise on an international level. With over 220 individuals from around the world in attendance and a roster of influential keynote speakers, the conference promoted deep conversations that focused on key global issues, including technology and the growing economic importance of the Artic. The goal of the conference was to “build new ideas with investors from across the world, build relationships in new markets, and develop our knowledge of the global investment marketplace.” Based on the rave reviews that APFC staff received in the weeks following the conference, including positive statements regarding content, attendance and opportunities for networking, we feel like our overall goals were achieved.
Additionally, during FY2019 APFC’s staff received recognition by Chief Investment Office Magazine, the Sovereign Wealth Fund Institution, Trusted Insight’s, Private Equity International as the North American Private Equity Investor - for the second year in a row, and Forbes Human Resources Council.
As we look ahead to the future of the Fund and that of APFC, we must recognize the major transformation that is happening to both. The State is now looking to the Fund and its management in ways that have not been contemplated before. While our core mission and intent has not changed – to manage and invest the Fund for all generations of Alaskans – we recognize there is an ever-greater need for transparency and resources in order to secure a reliable income stream for those depending upon it.
Current as of November 5, 2019