Alaska Permanent Fund Beats Benchmark Yet Again

CIO Marcus Frampton discussed APFC results for the period ending September 30.

The Alaska Permanent Fund filed its report for the first fiscal quarter of 2020.

The largest U.S. state sovereign wealth fund reported earning returns of 1.24%. That exceeded its benchmark (60% Stocks|30% Bonds|10% RE & TIPS) return for the quarter.

The fund has topped the benchmark in three- and five-year periods as well.

Alaska Permanent Fund CIO Marcus Frampton was pleased with the results.

“APFC navigated this period well, and our growing private markets and absolute return strategies are increasingly providing insulation from shorter-term public market fluctuations,” he said. “For example, APFC’s Private Equity & Special Opportunities portfolio posted a 4.2% return for the quarter, outpacing both domestic and international public equity market returns by a wide margin.”

The Alaska Permanent Fund Performance

Since 2012, the fund has upped its allocation to private equity firms by 3% to the current 13%.

Frampton is looking to boost that figure to as much as 19% to 20% in the next few years. He intends to be cautious about deploying the capital as he sees a lot of red flags in the markets and economy right now.

“If you look at credit spreads, valuations on public equities or private equities and then where we are in the cycle, late in a 10 or 11-year expansion, it is concerning,” he told Bloomberg this week. “I’m not calling for the cycle to turn but there’s certainly a lot of red flags out there, so we want to be ready. At some point, the cycle will turn.”

The Alaska Permanent Fund tends to favor smaller private equity firms in its portfolio.

Frampton thinks these smaller firms are able to be more value-conscious and can exert greater control over the companies in which they invest. They are also building cash so that when the cycle does turn, they will have dry powder to deploy in private equity strategies.

For the past five years private equity, REITs and infrastructure projects ranked among the fund’s best performers. Interestingly REITs outperformed nontraded REIT fund and direct REIT investment. This is a trend I have noticed in several large fund reports recently with the public REIT markets offering higher returns that the private side of the marketplace.

Other Ways the Fund is Driving Returns

The fund is also stepping up its direct and co-investment strategies to raise returns. In the last year, they have invested in a number of direct deals. They include California REIT, American Homes 4 Rent, Juno Therapeutics, Indigo Agriculture, and infrastructure firm Generate Capital and Sana Biotechnology.

Now, these strategies are a small piece of the pie at the $66 billion state fund.

However, they seem to be working well. Through December of 2018, annualized returns are reported to be in excess of 60%.

Related from Tim Melvin: What’s Inside The California State Teachers’ Retirement System Portfolio?

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News
Venture Capital: Home Management Platform Thumbtack Raises $275M
June 16, 2021     News, Venture Capital

Home management platform Thumbtack enables its millions of customers to find and hire small businesses and local professionals for virtually any home-related task. It announced Tuesday that, “on the heels…
FinTech: 10X, The Fintech Founded By Ex-Barclays Chief Antony Jenkins, Rakes In $187M To Scale Massively
June 16, 2021     FinTech, News, Venture Capital

Founded in 2016 by Antony Jenkins, former CEO of Barclays (LON: BARC), fintech 10X Future Technologies has raised $187 million from a clutch of bulge bracket investors. The firm’s oversubscribed…
Artificial Intelligence: LVMH Ties With Google Cloud For AI-Powered Experiences At Maisons Luxury Brands
June 16, 2021     Artificial Intelligence, Latest News, News

LVMH (EPA: MC) announced today its tie-up with Google (NASDAQ: GOOGL) Cloud for the development of cloud-based AI solutions. LVMH and Google Cloud will work together and deploy the latter’s…
Alternative Investments: HSBC Consolidates Alternatives Units Into “HSBC Alternatives”
June 16, 2021     Alternative Investments, News

HSBC (NYSE: HSBC) has created HSBC Alternatives, an umbrella unit to house its disparate alternatives assets. It will be formed from multi-manager Hedge Fund and Private Market teams, as well…