The Alaska Permanent Fund Board of Trustees considered, discussed, and pondered higher-risk investments. But ultimately, at the Tuesday special meeting the trustees backed away from a strategy of moving some of Alaska’s rainy day fund into riskier positions.
The board of trustees is putting together a four-year strategic plan to increase the value of the Permanent Fund to $100 billion, something that seemed possible several years ago, but has been slipping away recently, due to various conditions.
The decision on the strategic plan has been put off until the board’s December meeting, but the various comments from trustees shows a reluctance to change the current return goal of CPI +5.
The Permanent Fund ended Fiscal Year 2021 with $81.9 billion in value, which was a record, and showed a record return of nearly $30%. At that point, reaching $100 billion seemed possible. With a Percent of Market Value draw to pay for state operating costs, it provided about $3.1 billion to the state budget.
As with other funds, it has suffered from a tumultuous market impacted by Bidenomics, and has has been in the mid-$70 billion for several weeks. There is only $1.1 billion in the Earnings Reserve Account.
Deven Mitchell, Chief Executive Officer said he appreciated the conversation about the target rate of return
“The ability of the Board to acknowledge and rely on the professionals and consultants – that was impactful,” he said.
“Today’s meeting piqued public interest and may have appeared to be a brainstorming session – but was ultimately a public meeting in action as the Trustees, staff, and advisors debated important topics for the future of the corporation and the fund,” Chairman Ethan Schutt said. “None of this is final yet as staff has a bit more work to do to inform the process.”
The trustees will take final action on the strategic plan initiatives during the December Board, including:
- – Growing the Fund to ensure long-term sustainability and real growth
- – A constrained approach to tactical Fund leverage with defined parameters
- – Advancing work on key person risk mitigation measures
- – Consideration of an Incentive Compensation funding structure for long-term retention of talent
- – A long-term vision for expanding APFC’s presence in the heart of financial markets
- – Further consideration of the need for Personnel Record Exemptions
In discussing measures to support corporate functionality, the board talked about the need for public transparency, and improved processes. The board will not be pursuing exemptions to the Open Meetings Act and the procurement statutes within the strategic plan.
The next meeting of the board of trustees will be on Dec. 13-14, 2023, in Juneau and via webinar.
What difference does it make? Our progressive Marxist legislators are going to piss it away on useless feel good spending for their special interest favored groups anyway.
The better headline:
“Permanent fund board reluctant to move to a more risky investment strategy.”
We can grow the fund more easily, and without greater risk, if we stop paying Big Oil $8 dollars per barrel to take our oil. Because of SB-21 Alaskans have lost- for a family of four- a staggering $40,000 per family in dividends because we are paying billions in corporate welfare to Big Oil. Its not smart, and its hurting Alaskans.
Dunleavy is doing to Alaskans what Biden is doing to our country with open borders.
Yes. That doesn’t sound like it helps Alaska at all. I question if seeing how difficult and expensive the federal government makes for petroleum and gas business to do business up here if the state paying them was looked more as an incentive just to keep them here? Still the difficulty to creating high paying jobs doesn’t excuse that majority of Alaskan families not to work and not to encourage one another to work and stay employed in one employment developing their work skills. We in Anchorage do have private employments of large businesses, hotels, franchises, and small businesses still looking for a person who will be reliable. There are a variety of ages (boomers, GenX, Millennials, and GenZ) as well as a variety of ethnicities here needing to work and are missing in workplaces needing a fresh perspective and fresh face among the current team cause the current work team are either one age group, one race, or one education experience.
So inflation isn’t transitory? Our economy is taking a slow but steady sh*t. Chickens aren’t just home, they’re pecking at all the doors.
No time to get clever with investments.
Markets go up and markets go down. One will remember that one of the worst crashes of all times – 2008, and the long run-up to it, occurred during the Presidency of George W. Bush – a Republican. It’s disingenuous to blame the poor recent performance on “Bidenonomics”, whatever that means.
Perhaps if Alaska adopted an income tax or sales tax to bolster the Treasury (yes, I am rolling on the floor overcome with laughter) instead of sucking money out of the Permanent Fund cash cow, it wouldn’t be so desperate to see the fund grow, and the pressure to implement riskier investment strategies wouldn’t exist. Remember – risk works in both directions.
Alaska has a population of under 3/4 million. If you think you’re going to generate huge tax revenues from a population base of this size, you’ll have to confiscate our entire paychecks. You’d still come up short and we’d all be reliant on the government, this is called communism.
I think that’s the plan.
Alaska’s leadership is trying to sleep in the bed it made(tossing and turning like a sleepless night). I guessing a state that’s been sorely dependent upon oil development and federal government leases, contracts and appropriations wasn’t something our state’s leaders should had relied upon.
You know what really doesn’t help is so many Alaskans between boomers, GenX, millennials are dependent upon either government, family, or both with a poor education and literacy development, so individual potential and talents can’t also be relied upon toward generating revenue through business.
I think the PFD trustees should continue playing the market it safe and responsible while state leadership reduce government, hold education accountable, decrease government welfare get Alaskans working with the non dependent government employers hiring for the long term, and read to the youngest GenZ students while parents of older GenZ young adults learn about a trade they shown interest doing and stick with it just like their great great grandparents done that provided an income to care for their young families during the fifties and sixties. The taxes will probably have to return However just as being dependent on family and government money coming in taxes and revenues from other states and nations living off taxes is no way yo live. We were made to create and build with our hands to pull in a harvest through our labor over a project. It’s easy for politicians to make taxes to increase it on those contributing citizens to pay for a community’s peoples laziness or illiteracy.
Sorry, but taxes should not “return.” Oil production has decreased by over 75%, and we don’t produce much else to sell to the world so we can consume disposable diapers, snowmobiles, food, clothing, etc. etc. Taxing government employees and big box retail employees won’t allow keeping all the government employees employed. Most of the sales dollars brought in by that big box retail employee leaves Alaska to replace the items sold. And even now, when knocking on doors for candidates there are days when at least half the houses have Amazon boxes just delivered. We have indeed built a dependent society with our oil revenues, and right now we have lots of help wanted ads while we have incessant complaints that we cannot process SNAP applications fast enough! This is not an economy that could be improved by an income tax. An income tax would increase our problems, as would returning public employees to a DB retirement.
I’d like to see the Permanent Fund put some of its wealth into physical (NOT paper or derivative) precious metals — gold, silver, platinum — to buffer at least some of the inevitable loss in its real (not nominal) value due to the ongoing, and eventually catastrophic, collapse of the US dollar.
> Permanent Fund Board is reluctant to move to a more aggressive investment strategy
With fiat currency, runaway inflation, and looming bankruptcy that seems like a sound idea.
The world economy is unstable. There is a genuine threat of a much larger middle east war. Inflation is everywhere.
China in particular is in bad shape, and they own a huge portion of our national debt.
Now is the time for making secure investments. Not sucker ones.
The legislature’s dream of one government to rule is all is gonna have to wait awhile.
Here’s the interesting thing about the “safer” investments like common stock…common stock represents ownership shares in a corporation and ownership implies two things: managerial control and sharing in corporate profits. But…your 100 or 1,000 or even 10,000 shares of common stock represent such a tiny ownership interest again the billions of outstanding shares (Microsoft has 7,441,000,000 shares outstanding) that even if you do vote your shares (most don’t) that your managerial control is appropriately zero. And…if your shares are “growth” (not dividend paying) then your only positive returns rely completely on the Greater Fool Theory of Investing where you hope that some other investor will buy your shares for more than you paid. If your shares are dividend paying then the corporate board of directors, an inbred group of elites for most major corporations, determines how much and when. So…your typical common stock has zero managerial control and pays you nothing out of revenues and your only returns depend on someone else buying into the BS that stocks are great investments. How about bonds? Until recently bonds were paying interest rates that didn’t even come close to matching real inflation so you actually lost money and with interest rates rising you’re still behind the inflation curve. These are just two examples of what they’re labeling as safer investments. FYI…there are no safe investments any more because the Federal Reserve/US Treasury partnership has flooded our economy with so much excess cash that all investments are overvalued. That’s just the truth we face today.
Excellent comment, PJ!
The coming financial, economic and monetary crash is going to be an extremely rude awakening for many.
This is my fathers letter to the PF Board & all Alaskans in 1999. As I see it, nothing has changed but the Board itself & the value of the Fund since. I gave this document to the PF board last spring in Soldotna when they held their annual spring meeting. I also reiterated his (my fathers) sentiments Ad Nauseam, along with my own disgust that with over 3 times the value Alaskans fail to benefit for which what the fund was meant to accomplish.
Please read Dad’s words of wisdom. Please also comment if any of you Alaskans can give constructive input as it appears the Board can’t get it together without our help. As you will see, Dad didn’t have all the answers to all the problems of returns on investments but had the right questions.
Something To Think About
Let’s keep things in perspective. No shell games or musical chairs. One thousand million and 26 times over is what we have. One year ago, we had 28 billion. Tell it like it is. We lost 2,000 million last year in the stock market, etc. The people of Alaska did not benefit at all from the money that was lost! If that amount were spent within the borders of Alaska, certainly the quality of life for all citizens would have improved enormously and we would still be in the position we are today with 26 billion in the permanent find. It does not take a rocket scientist to figure out the argument that the Alaska Permanent Fund is safe and the benefit to Alaskans is enough. That’s ridiculous! Believe that, and I will sell you the Brooklyn bridge. We have around 600,000 Alaskans, and 26 billion in our permanent fund. We are not getting proper use of that wealth. The quality of life of Alaska does not reflect that. This should change. It is not good enough to just invest one percent of these funds in Alaska and 99 percent out of state, also part of that 99 percent, 16 percent invested over seas.
The instate investment is not enough. Largely those who are not Alaska citizens enjoy the benefit of this wealth. This is not fair, it must be changed. We must not tolerate this unfairness. We must get the Legislature, and those charged with the responsibility, to correct his condition or they should be replaced with those who will listen and respond to this. The citizens of Alaska should ask the right questions of these people that can do something about getting this unfairness changed.
We should not get arguing among ourselves. Sales tax verses income tax verses permanent fund when we are really beating each other up and loosing sight of what is really being said. What pocket do I take your money out of, they are saying. When the question really is, why are we not getting the value of the wealth we already have? Why are we being asked for more and receiving less? It does not make sense! It makes one think who is serving whom?
They are pointing to investments by the state in Delta barley farms, fish ventures, etc. That did not tum out. This is true, but it is also true that these ventures were controlled by government, not the private sector. This could be the reason.
The point is, this wealth that belongs to the citizens of Alaska is unfairly benefiting those that are not the people of Alaska. Ask the right questions, and we could correct this. Fail to ask them, and it may get worse.
Ed Martin Sr. P.O. Box 521
Cooper Landing, AK 99572
This comment is written in very general terms, if you want more facts—go dig them out It was on a female investment show where Daughter Rubenstein who is newly appointed to the Permanent Fund Board, was advocating for a more aggressive investment strategy to increase the Fund from 74 billion to 100 billion in 3 years, she had Daddy Rubenstein advice and blessing for such a move. She also pontificated about how important it was to have a women on the Board, leading the way.. Daddy Rubenstein is the founder of the CARLYL GROUP.. Our Permanent Fund belongs to the People of Alaska, not the Ruebensteins.
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