Fund value increases in 3Q
The $64 billion Alaska Permanent Fund again earned strong returns in the third quarter of the state fiscal year and going forward its performance is likely going to be scrutinized like never before.
Fund managers saw their investments grow by 8.86 percent in the quarter. The Permanent Fund ended the quarter up $4.8 billion for fiscal year 2018 at $64.6 billion, according to a quarterly report released May 2.
The Permanent Fund is up 7.65 percent over the prior three years and 8.35 percent over the last five.
All of those figures are better than the corporation’s passive index benchmark by at least 1.5 percent.
On May 8, the Alaska Legislature quickly and quietly took the long anticipated step of passing legislation to utilize a 5.25 percent of market value draw from the Fund to support government and pay dividends.
How much will go to either long-term is still unclear. It is a move the APFC Board of Trustees has advocated for to provide stability in the expectations of Fund managers for long-term investment strategies.
The draw in fiscal year 2019, which starts July 1, is expected to be about $2.7 billion.
And while the POMV has a nameplate of 5.25 percent, it is done on a five-year look back of the Fund’s average value over that time. That will make it an effective 4.35 percent draw, legislators noted.
Those draws will come out of the Earnings Reserve Account, which held $15 billion in net income and $2.6 billion in unrealized gains as of March 31.
At 41 percent of the Fund’s total assets, the corporation’s $26.8 billion public equities portfolio returned 11.42 percent fiscal year-to-date, 16.31 percent over the past year and 8.65 percent over the previous three years.
The $7.6 billion of private equity and special opportunities investments have done exceptionally well, returning 18.94 percent over the past nine months and 22 percent over the past five years.
The success is due in part to the Fund’s co-investment program of 23 investments averaging $46 million each and has netted a 64 percent internal rate of return since it was started five years ago, according to the report.
Elwood Brehmer can be reached at [email protected].