About the Alaska Permanent Fund Corporation (APFC)

APFC is a state-owned corporation, based in Juneau, that manages the assets of the Alaska Permanent Fund and other funds designated by law, such as the Alaska Mental Health Trust Fund.

Origins

Four years after passing a constitutional amendment to create a Permanent Fund, in 1980 the Alaska State Legislature created the APFC. From February 1976 until April 1980, the Department of Revenue Treasury Division managed the state's Permanent Fund assets.

Board and staff

A six-member, governor-appointed Board of Trustees oversees APFC. One seat is statutorily assigned to the Commissioner of Revenue. The governor selects one additional cabinet member to sit on the Board. Four public members fill the remaining seats, which have staggered, four-year terms. The Board appoints an executive director, who manages a staff of about 35. The Board meets around six times each year, with its annual meeting held the third week of each September. Meetings are held at APFC's Juneau office (pictured), in Fairbanks and in Anchorage.

Investment strategy

One of the most important things that the Board does is to review, adopt and monitor an asset allocation that achieves a five percent real (above inflation) rate of return in accordance with the Prudent Expert Rule. The Prudent Expert Rule charges fiduciaries to act with discretion and intelligence, to seek reasonable income, preserve capital, and, in general, avoid speculative investments. To reduce risk exposure, APFC diversifies assets as well as management styles. The APFC uses both internal staff and external money managers in managing the Fund's asset classes:stocks, private equities, bonds, real estate infrastructure and absolute return strategies.

Goals

APFC Trustees want Alaskans to modernize and protect the Fund through adopting a Percent of Market Value (POMV). POMV would limit spending to 5% of the Fund's total market value. POMV would inflation proof the entire Fund - not just principal. Under the current system, inflation proofing is both partial and optional, while POMV inherently conserves earnings in excess of 5 percent. Given that the Fund has earned over 10% historically, the Board is confident that POMV will more than preserve Fund prinicpal. POMV would provide optimal insurance for protection and growth as compared with the current, obsolete payout method, designed in 1976.