Alaska Permanent Fund Gains 4.9% in Fiscal 2015 on PE Prowess

Aug 25 2015 | 6:03pm ET

It may be cool otherwise, but Alaska’s investments were pretty hot over the past year. 

The Alaska Permanent Fund, set up to assure each resident shares in the state’s natural resources wealth, returned 4.9% in the 2015 fiscal year ended June 30, according to preliminary data contained in a statement. The return was well ahead of the fund’s performance benchmark, which returned -1.4%.

The fund ended June 30 with a value of $52.8 billion, net of an annual dividend of $1.4 billion. The relative results were consistent with three and ten-year returns, and were achieved with generally less risk than the benchmark, noted the fund in a press release. 

Highlighting the returns:

  • U.S. stocks gained 7.2%, while the non-U.S. portfolio lost -5.2%. The Fund’s global portfolio, which contains both U.S. and non-U.S. stocks, returned 1.2%. 
  • Bonds had periods of difficulty over the fiscal year; the fund’s U.S. bond portfolio was up 1.2%, the non-U.S. bond portfolio lost -2.4%.
  • Real estate investments gained 9.8%. 
  • Private equity investments surged 16.5% percent over the fiscal year. Private equity activity during the year involved committing more than $800 million to 19 funds, according to PE Hub, and the fund is targeting $900 million this year.
  • Infrastructure investments gained 4.7% for the period. 
  • Absolute return and real return portfolios, comprised of multiple asset types, returned 1.7% and 3.4% respectively.

“This was a more volatile year for the capital markets, so we are pleased to be able to report a positive return overall,” said Valerie Mertz, Acting Executive Director. “After two years of rising stock markets, we weren’t surprised to see corrections in the U.S. and overseas markets at the start of the fiscal year. Later rallies helped make up lost ground, but the earlier losses certainly weighed on overall returns.”

The fund did not comment on whether market volatility subsequent to the end of its 2015 fiscal year had significantly impacted its results. 

Founded in 1976, the Alaska Permanent Fund is a quasi-sovereign fund into which at least 25 percent of all mineral lease rentals, royalties, royalty sales proceeds, federal mineral revenue-sharing payments and bonuses received by the state are placed. The fund’s principal may only be used for income-producing investments. A portion of the income is distributed each year to Alaskan residents in the form of an annual dividend. 

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