The Alaska Permanent Fund is a model for sovereign wealth funds globally

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Through Angela Rodell

Updated: 47 minutes ago Posted: 47 minutes ago

Forty-five years ago, with the forecast of a time beyond their new oil wealth, the Alaskans took the initiative to create the Permanent Fund, thereby constitutionally protecting a portion of the royalties for future generations. As manager of the Fund, the Permanent Fund Corporation was created to invest the assets in an innovative financial structure that continues to serve as a model for sovereign wealth funds globally today. The legacy of the Alaska Permanent Fund is, and always has been, a source of pride for the state, and as a state-owned investment company, APFC is primarily invested with Alaska and invested with the people of Alaska.

As Alaskans, we are now at a crossroads, as we continue to transition from over 50 years of dependence on oil revenues and the habit of receiving dividends for almost 40 years. Finding an economically sound solution to support the state and Alaskans is more important than ever, and it is clear that the Permanent Fund is at the center of the current conversation on fiscal policy. Now providing over 70% of the state’s unlimited spending from investment income, the Alaska Permanent Fund has continually proven itself to be the renewable financial resource for which it was designed.

As the Fund continues to evolve as an endowment, we stand in solidarity with our fellow Alaskans to unite in our support for Alaska’s future. As CEO of this company, I want to reassure Alaskans that we remain fully engaged in our vital role, knowing that our performance is directly correlated with increased financial support for essential services upon which our fellow Alaskans depend, including health, safety and infrastructure.

Fiscal year 2021, which ended on June 30, is unlike any other in recent history. While achieving record growth and performance throughout the past year, we have always made it aware of the unresolved economic and social uncertainties associated with the pandemic.

When I look at the company as a whole, I have been inspired by the positive culture and commitment of every member of our team of public servants, our board of directors and what we have accomplished together. We are proud of our work but also humble, not taking for granted that the people of Alaska continue to have the courage to support this endeavor, knowing how important it is to protect the Fund for the good of our communities. today and in the future.

I want to take a moment to celebrate the accomplishments of our team of sophisticated investment managers as the fund topped $ 80 billion in FY21, exceeding expectations and baseline forecasts, creating real value. by actively investing the assets of the permanent fund. The overall outperformance of our passive benchmark of 1.29% or $ 1.1 billion during FY21 is a tangible measure of the Fund’s performance, which directly benefits all Alaskans. While we are proud of these results, we remain focused on the long-term sustainability of the Fund, where we have outperformed the passive benchmark by 1.80% or $ 10.4 billion over the past 10 years. With warning signs already seen in the first quarter of FY22, we recognize that an exponential growth path is unlikely to continue indefinitely. By adhering to our diversified and risk-adjusted asset allocation, APFC will constantly strive to protect this source of intergenerational wealth.

Detailed financial information and FY21 highlights are available in FPAC’s Annual Report at annualreport.apfc.org. This year’s theme, “Investing with Alaskans,” touches me because that’s what FPAC does every day. As trustees and stewards of the state’s most valuable financial asset, we remain committed to protecting and growing the Permanent Fund for Alaskans today and for generations to come.

Angela Rodell is the CEO of the Alaska Permanent Fund Corporation. She was previously commissioner of the Ministère du Revenu.

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