Permanent Fund reaches $40.1 billion on 20.6 percent gain

DIVIDEND: $800 million expected to go toward annual cash payout for qualifying Alaskans.

August 2, 2011 

JUNEAU -- A fund established decades ago to share Alaska's oil wealth with future generations has hit $40.1 billion.

The Alaska Permanent Fund on Tuesday reported a 20.6 percent gain for the recently ended fiscal year, its third-highest return and biggest since 1986.

Chief Executive Mike Burns said it was an outstanding year but the fund's board and staff don't chase returns. He said the goal is a positive rate of return over the long run and that's the focus in building a portfolio that doesn't change in response to short-term market conditions.

That's not to say the fund wasn't affected by fluctuations during the recession and stock market declines. The fund fell at one point to $26 billion during the economic slump, Burns said. It ended the 2010 fiscal year at about $33.3 billion.

Burns said the fund has largely stuck with the same asset allocation because it is more interested in long-term than short-term gains.

"We don't live year-to-year, and really try to take a longer view," he said.

The fund reported that stocks comprise about half its total value and were the biggest contributor to its overall performance. The fund's real estate portfolio gained 16.9 percent for the year; U.S. bonds 5.3 percent; and non-U.S. bonds 0.6 percent. The fund reported that its alternative assets also contributed to the up year.

The overall 20.6 percent rate of return includes realized and unrealized gains.

Figures released Tuesday were unaudited, and final figures were expected to be released next month at the Alaska Permanent Fund Corp.'s annual meeting.

The fund receives 25 percent of the state's oil royalties, Burns said, which amounted to $887 million last fiscal year.

The fund earned $2.1 billion in statutory net income, which Burns said takes into account only realized gains. It is from this figure that calculations are made that determine the annual dividend that most Alaskans receive.

This year, the fund expects to transfer $800 million to the dividend division for checks to Alaskans. Last year, the fund said, $858 million was transferred.

The amount of investment earnings allocated to dividends is based on a five-year rolling average of Permanent Fund performance. Last year, nearly 641,600 Alaskans were deemed eligible to receive dividend checks of $1,281.

Anchorage Daily News is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service