Permanent Fund Corporation Shifts Investments

During regular meetings this week, the Permanent Fund Corporation Board of Trustees changed their Investment Policy, including the creation of three new internally managed programs for stocks, co-investment of absolute return funds and co-investment of private equity.

 

Board Chair Bill Moran said the Board has been careful in its introduction of new programs over the past 35 years, “starting with narrow parameters and leveraging the abilities of external management firms.”

 

However, Moran said the Fund has grown enough that it now starts to make fiscal sense to bring investments in-house when we feel our ability is comparable to our external managers.”

 

The Board also authorized $775 million to be added to the existing $4.0 billion commitment to private equity, bringing the total of new commitment funds available  for the next fiscal year to $1.225 billion.

 

With interest rates remaining low, the Board moved to increase the maximum leverage in the real estate portfolio from 25 to 35 percent, and added a 50 percent leverage maximum at the property level.

 

The Board also:

• Merged the Cash and Interest Rates buckets in the risk-based target asset allocation.
• Amended the Investment Policy to allow up to 50% of the absolute return portfolio to be invested with funds seeking a higher return. To-date, the entire mandate had been placed in funds that sought an absolute return with corresponding lower level of risk.  This change will provide for more return potential while still managing the total risk level of the absolute return fund program.
• Authorized staff to invest in special opportunity investments with commitments of more than two years.
• Reviewed the APFC’s fiscal year 2013 spending and authorized the 2014 proposed budget.
• Reviewed the Fund’s performance for the first three quarters of the fiscal year as presented by the Board’s general consultant, Callan Associates.

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