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Alaska Permanent Fund makes a comeback as markets rebound

Amanda Coyne
istockphoto

Benefiting from an improving market, the Alaska Permanent Fund earnings for the third quarter of fiscal year 2012 were 6.9 percent, which has helped the fund reclaim some of last fall’s losses. This brings the year-to-date return to 1.9 percent.  The fund ended March with a value of $41.5 billion, the highest month-end closing value in the fund’s history.

Last fall, the fund gotten beat up by bad market conditions, particularly in the European markets, or the “PIIGS,” they’re called in financial circles: Portugal, Ireland, Italy, Greece and Spain. The market, however, is beginning to improve enough to counter those losses.

“The market is moving back,” Michael Burns, chief executive officer of the fund, said. “It seems to have lowered its anxiety about those issues,” and is now relaxed enough to take some risks.

The Permanent Fund’s U.S. stock portfolio returned 13.3 percent for the quarter, while the non-U.S. and global portfolios returned 11.9 percent and 11.5 percent respectively. That shows a rebound, but the fiscal year-to-date performance looks less impressive. The U.S. stock portfolio returned 6.4 percent, while the non-U.S. portfolio showed a loss of 7.2 percent and the global portfolio was flat, up 0.6 percent.

The Alaska Permanent Fund was established in 1976 through a constitutional amendment, dictating that at least 25 percent of all mineral lease rentals, royalties, royalty sales proceeds, federal mineral revenue-sharing payments and bonuses received must go into the fund.

This fiscal year, the state is expected to deposit $938 million into the fund.

Contact Amanda Coyne at amanda@alaskadispatch.com.