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APFC Board approves alternative investment allocations, manager searches

MAY 23 – The APFC Board of Trustees made allocations to three alternative investment programs, authorized two investment manager searches and approved expenditures for the Fiscal Year 2011 and 2012 budgets at its regular meeting on May 19 and 20 in Anchorage.

“The Board believes that alternative investments are important to complement traditional asset classes, adding diversification and improving the Fund’s risk adjusted rate of return,” said Bill Moran, APFC Board Chair. “For example, timber investments, an asset class that other State funds have been in for some time, show promise to add stability and long-term returns for the Permanent Fund.”

The Board reviewed existing and proposed programs and approved the following items:

  • Engaging Callan Associates, the Board’s general consultant, to conduct searches for timber managers and and a diversified inflation fund manager. This would be the first investment for the Fund in these investment types.
  • A $600 million total allocation to new private equity investments, to be made through the existing gatekeepers, Pathway Capital Management and HarbourVest. This new allocation will be added to the projected commitment of $3.1 billion that Fund staff expects to have in place by June 30.
  • A $400 million allocation to infrastructure for FY 2012, and an authorization for staff to conduct a search for new infrastructure managers if deemed necessary.
  • A $750 million additional allocation to private credit for FY 2012 that will be allocated to different corporate credit opportunities.

The Board also expanded and clarified the section of APFC’s existing investment policy that pertains to credit opportunity funds, such as distressed debt or mezzanine debt. The amendment added authorization to invest via fund-of-funds, in addition to direct investments, specified the means by which approval could be made, and provided that appropriate return objectives and benchmarks would be set by the executive director.

Following the conclusion of the legislative session, the Board authorized staff to implement APFC’s Fiscal Year 2012 budget as approved by Governor Parnell and the Legislature. In addition, the Board authorized expending up to an additional $18.5 million for manager and custody fees in Fiscal Year 2011, following Legislative approval.

The Board’s next regular meeting is its annual meeting, schedules for September 29 and 30 in Juneau.

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