FUND NEWS                               May 21, 2015

APFC Board amends investment policy, approves private asset commitments

(MAY 21) The Alaska Permanent Fund Corporation Board of Trustees amended the APFC’s investment policy and approved private asset commitments for fiscal year 2016 at a regular meeting in Anchorage on May 19 and 20.

The Board approved amendments to two sections of the Corporation’s Investment Policy. The first set of changes amended the section of the policy concerning infrastructure investments to add other real assets that have low correlations with the Fund’s other major asset classes. The addition would cover both tangible and intangible assets such as timberlands, agricultural farmlands, and leasable hard assets such as aircraft or railcars. This change would allow staff to seek out any investment that has similar risk and return characteristics as infrastructure, rather than be limited to a rigid focus on traditional infrastructure sectors.

The section of the policy that guides absolute return investments was also amended, incorporating changes to group the Fund’s absolute return and real return investments under a single program. Other changes to this section recognized the evolution of both the Fund’s absolute return program and the risk management tools used by hedge fund managers. Specific amendments to the policy authorize the Fund to be placed in a smaller number of more concentrated investments to help lower investment costs and prevent overdiversification.

In addition to policy changes for the infrastructure program, the Board also approved allocations for the upcoming year for infrastructure and other private market investments. In all areas, the allocations are dependent on staff or outside managers finding suitable investments, and may not be fully committed at the end of the fiscal year. The allocations for fiscal year 2016 are:

  • $400 million to infrastructure, split between co-investments and infrastructure funds, with co-investments limited to $200 million. An additional $200 million may be added to the total infrastructure allocation if warranted.
  • $900 million in total to private equity. This will be split between co-investments and private equity funds, with co-investments limited to $225 million. An additional $200 million may be added to the total private equity allocation if warranted.
  • $100 million to private credit.

The next regular meeting is scheduled for September 29 and 30 in Anchorage.