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.