Permanent Fund up 10.5 percent for FY13
AUG 5 - The Alaska Permanent Fund returned 10.5 percent for fiscal year 2013, ending the period with a balance of $44.9 billion according to preliminary data. The Fund trailed its composite benchmark, which returned 11.4 percent, reflecting the more conservative nature of the Fund’s holdings compared to the benchmark.
All of the Fund’s asset classes produced positive returns for the fiscal year, with U.S. and non-U.S. stocks leading the way with returns in the high teens. Global stock markets showed solid performance for most of the year, though U.S. markets struggled in the fall with uncertainty regarding the election and the response to the fiscal cliff. The recent market drop was enough for investors to take notice, but not enough to significantly impact the Fund’s performance for the fiscal year.
“The actions by central banks here in the U.S. and overseas appears to have had a strong impact on stock values, certainly more than global economic indicators, which have not been encouraging,” said Michael J. Burns, CEO. “Regardless of the cause, the upturn in the markets this fiscal year was a welcome change from the conditions that produced a flat return for fiscal year 2012.”
The Fund’s U.S. stock portfolio gained 22.4 percent, while the non-U.S. portfolio returned 12.3 percent and the global portfolio produced 19.7 percent. At $20.6 billion as of June 30, stocks comprised a little under half of the Fund’s total value.
It was a third year of positive performance for the real estate portfolio, with preliminary data showing the portfolio with a 10.3 percent return for the fiscal year. Due to the lagged nature of property valuations, the Fund’s final real estate performance for the fiscal year will not be available until September.
Over the course of the fiscal year investors gained confidence and sought returns over safety, creating a dampening effect on bonds. As a result, performance in the bond portfolio was not as positive as was provided by the Fund’s other holdings. The U.S. portfolio was close to flat at 0.4 percent, while the non-U.S. portfolio gained 1.7 percent.
The external CIO/real return program gained 4.7 percent for the fiscal year, while the absolute return portfolios returned 8.6 percent. The Fund’s infrastructure investments returned 10.7 percent, and private equity investments were up 15.3 percent.
The Fund earned $2.9 billion in statutory net income for fiscal year 2013. Comprised of interest from bond holdings, dividend from stocks, rent from the Fund’s real estate investments and the realized gain on the sale of any assets, statutory net income is the amount used to calculate the annual Permanent Fund Dividend. Based on the calculation, APFC will transfer $604 million to the Permanent Fund Dividend Division for the fall dividend payment. The dividend distribution transfer in 2012 was $605 million.
The Board of Trustees will review the Permanent Fund’s final, audited performance data at its annual meeting in Fairbanks on September 25 and 26.
Posted: August 5, 2013