Alaska Permanent Fund ends fiscal year up 24% to over $81 billion

The 2021 fiscal year results are in, and the Alaska Permanent Fund is a big winner.

Alaska’s primary revenue source ended June with a total value of nearly $81.1 billion after starting the year at $65.3 billion.

The 24 percent growth in the fund over the fiscal year was on the back of nearly unprecedented overall investment returns, which totaled 26.5 percent for the year through May 31, the most recent performance figures available from the Alaska Permanent Fund Corp.

The corporation has achieved full-year returns greater than 20 percent just three times in the history of the fund, the greatest being a 25.6 percent return in 1985, according to APFC records.

[Alaska Legislature will take public testimony on the future of the state budget and Permanent Fund dividend this week]

The fund had an unaudited value of $81.3 billion on July 27.

Its monthly reported value bottomed out at just more than $60 billion during the early days of the domestic pandemic in March 2020.


As of June 30, the constitutionally protected corpus portion of the fund alone exceeded $60.1 billion; the remaining approximately $20 billion was in the Earnings Reserve Account, which lawmakers can spend.

Royalty deposits, investment gains and legislative appropriations have caused the corpus to grow by nearly 50 percent since March 2020 and another $4 billion legislative transfer from the ERA to the corpus this month will add further to the un-spendable portion of the fund.

Gov. Mike Dunleavy intended to veto a $4 billion ERA-to-corpus transfer approved in the state budget passed by the Legislature and announced as much in a press briefing and materials from his office. However, the veto was mistakenly absent from the final enacted version of the budget and Dunleavy decided against further pressing the issue when legislative leaders rejected his request to change the final budget.

The veto issue would become a moot point if the Legislature, and eventually voters, would approve the portion of Dunleavy’s constitutional amendment proposal to combine the ERA and corpus into a single, more traditional endowment-like account.

The structural change to the fund generally has support amongst legislators who prioritize adhering to the 5 percent annual draw limit over dividend appropriations, but it remains unclear if the governor’s broader Permanent Fund and dividend proposal, which includes a $3 billion draw in excess of the 5 percent limit, will gain traction in the upcoming special session set for August. The draw has covered about 70 percent of the state budget since being approved in 2018.

Regardless of the long-term outcome of the proposed constitutional changes to the fund, the $4 billion transfer will leave approximately $9.3 billion in unobligated, realized earnings available for appropriation. Department of Revenue officials have generally said the state should try to maintain an ERA balance several times larger than the $3 billion-plus annual draw as a buffer against years of poor investment returns.

The current impressive returns have been driven by a continued strong run in stocks. Public equities accounting for 38 percent of the fund’s investment portfolio generated returns of 47.1 percent in the fist 11 months of the fiscal year, though gains have been more modest in recent months.

The Dow Jones Industrial Average increased 38 percent over the same period.

Matching the fund’s public equity performance was its private equity and special opportunities portfolio — approximately 18 percent of the fund’s portfolio at 14.7 billion — which netted an 11-month return of 47.5 percent.

Fund managers expect to gradually step-down the public equity allocation from 39 percent today to 33 percent of the fund by the end of 2025, according to a chart published by the APFC. Fixed income investments are similarly planned to be a smaller portion of the fund, expected to go from 21 percent to 18 percent of the fund’s portfolio.

Those allocations are likely to shift to private equity and real estate, which are planned to go from 15 percent and 7 percent of the fund to 19 percent and 12 percent, respectively. The allocations of other asset classes such as private income, and absolute return are expected to remain steady. About 2 percent of the fund is consistently held in cash.

APFC spokeswoman Paulyn Swanson wrote in an emailed response to questions about the asset allocation changes that the corporation’s investment team has taken an active approach to rebalancing the public equities portfolio during the market run-up and the future target allocations were first approved by the APFC trustees in May 2020.

Chief Investment Officer Marcus Frampton also said in an emailed statement that the multiyear increases in private investment allocations are indicative of the time it takes for those investments to begin generating corresponding returns.

“The reduction in public equities over time reflects the growth in these private asset classes as opposed to a reaction to (the) current market market environment for stocks or a desire to lock in gains from recent market moves,” Frampton said.

Elwood Brehmer, Alaska Journal of Commerce

Elwood Brehmer is a reporter for the Alaska Journal of Commerce. Email him: