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Permanent Fund returns reflect market woes, down in first quarter

Fund returns reflect market woes, down in first quarter

NOV 2 - The weight of continued slow growth in the U.S., as well as political and economic difficulties abroad, was fully felt by the markets in the first quarter of fiscal year 2012. The Permanent Fund's investments returned -8.3% for the period, ending with a value of $37.0 billion, down $3.1 billion from the start of the fiscal year.

"Three months ago, when we reported that the fund had returned more than 20% for the fiscal year, my enthusiasm was tempered because bull markets don't last forever," said Michael Burns, Chief Executive Officer. "Our Board builds an all weather portfolio that doesn't change to reflect market conditions. We didn't chase returns last year, and we won't take a reactive approach this fall."

The Fund's stock portfolios were the greatest contributors to the loss, with the U.S. and global portfolios returning -16.4% and -16.2% respectively, while non-U.S. stocks returned - 19.8%. The Fund's absolute return and real return portfolios performed considerably better, returning -2.7% and -2.0% respectively. The real estate portfolio was essentially flat for the period at -.5%, while the Fund's bond portfolios were in positive territory, with the U.S. bond portfolio returning 1.8% and the non-U.S. bond portfolio returning 3.3%.

"These returns demonstrate how an all weather portfolio is supposed to work," said Burns. "Stocks were up by 30% for the last fiscal year while most of the other portfolios returned less, even much less than that. But now that the situation has reversed, our bond and real return portfolios are providing a balance with either positive performance or significantly smaller losses."

APFC recorded $468 million in statutory net income for the first quarter, which is used to calculate the dividend.
 

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