FUND NEWS                               Sep 12, 2016

Permanent Fund up 1.02% in Fiscal Year 2016

The Alaska Permanent Fund’s (Fund) total investment portfolio gained 1.02% in fiscal year 2016 (FY16), according to recent figures. The Fund ended June 30, 2016 with a total value of $52.8 billion, comprised of $44.2 billion in the Principal of the Fund and $8.6 billion in the Earnings Reserve.

The FY16 returns are reflective of a volatile market that recorded significant losses during the first half of the fiscal year when the value of the Fund dropped by $1 billion to $51.8 billion as of December 31, 2015 and then gradually overcame those losses to record a positive performance result as of June 30, 2016. Although overall returns for the global stock markets were generally negative, these losses were offset by significant gains in bonds, real estate, private equity, and infrastructure investments.

Chief Executive Officer, Angela Rodell, notes that “Diversification proved its value in 2016. Despite losses across nearly all equity markets, the gains in the fixed income, real estate, and private market investments led to overall growth for the Permanent Fund.”

In measuring performance, the Alaska Permanent Fund Corporation (APFC) seeks to deliver better investment returns than short-term index benchmarks, public fund peers, and long-term objectives set by the Board of Trustees. For 2016, the Board of Trustees set the Total Fund Return Objective at 6.01%, based on a 5% target real return plus the Consumer Price Index (CPI) inflation adjustment which was calculated at 1.01%. The FY16 returns and market indices by Asset Class are noted in the table below.

Alaska Permanent Fund - Fiscal Year 2016 Performance

  % of the Fund Investment Return *Reference Benchmark **Median Public Fund
Total Fund 100% 1.02 1.57 0.54
US Bonds 19% 5.29 6.00 5.08
Non-US Stocks 16% -9.39 -9.84 -9.33
Real Estate 13% 12.55 11.38 11.86
US Stocks 12% -0.09 2.14 0.84
Global Stocks 12% -4.00 -3.25 -3.65
Absolute Return 10% -1.92 6.01 ** 
Private Equity 7% 14.38 6.01 ** 
Infrastructure and Other Real Assets 3% 17.59 6.01 ** 
True Special Opportunity 3% -18.71 6.01 ** 
Non-US Bonds 2% 7.30 9.81 10.12
Public and Private Credit 2% 2.67 6.01 ** 
Private CIOs/Real Return Mandate 1% 9.68 6.01 **

*For liquid market categories, publically traded indices are used as a reference and for illiquid markets, long-term investment targets are used as a reference.
**not available

APFC diversifies the Fund’s portfolio in order to reduce and control Fund risk. The Fund is invested with a long-term investment horizon that seeks to maximize total return, while preserving capital to meet the needs of current and future generations of Alaskans. Final audited returns will be presented to the Board of Trustees at APFC’s Annual Meeting on September 27 and 28 in Juneau. Additional detailed information can be found at the following links for the Permanent Fund’s financial statements and investment performance.