"The Board firmly believes that investing in alternative assets, such as private equity and infrastructure, is necessary to ensure that the Permanent Fund is well diversified," said Board Chair Steve Frank. "Alternative assets help balance our exposure to traditional public assets under a wide range of market conditions, and we have spent the last few years creating and slowly growing the Fund's allocations in these areas. The Board continues to believe in their importance to the Fund's future performance, and the asset allocation we adopted today reflects that."
Under the new asset allocation, private equity and absolute return will each move from 4% to 6% of the total allocation, and the allocations to infrastructure and emerging market stocks will each go up by 1%. The shift is balanced by reductions in the allocations to US large capitalization stocks and non-US developed market stocks, as well as US bonds. The new allocation is 26% US stocks, 13% non-US stocks (including emerging markets), 14% global stocks, 19% US bonds, 3% non-US bonds, 3% infrastructure, 10% real estate, 6% absolute return and 6% private equity.
The Board also approved APFC's Fiscal Year 2009 budget as passed by the Legislature in House Bill 310 and approved by Governor Palin on May 23.
Other items covered by the Board during the two-day meeting included:
A motion to ensure that the Corporation's office remain in Juneau passed 4-1.
A review of the Fund's stock portfolio structure and performance, including the small capitalization manager pool.
An overview of updates to the financial model created for the APFC by Callan Associates and used for modeling Fund policy changes and financial market fluctuations, to see the range of possible outcomes.