Permanent Fund Corp. earns 12.6% in FY17

  • By Elwood Brehmer
  • Thursday, August 31, 2017 9:47am
  • NewsBusiness

While the State of Alaska is still mired in a damaging cycle of multibillion-dollar budget deficits, it’s hard to imagine a scenario in which its biggest financial asset could be doing better.

The Alaska Permanent Fund Corp. achieved a 12.57 percent return on its namesake Fund during the 2017 fiscal year that ended June 30. The Permanent Fund ended the year with a record value of $59.8 billion.

The corpus, or principal, of the Permanent Fund is constitutionally prohibited from being spent; however, the Fund’s Earnings Reserve Account is available for appropriation and it ended fiscal 2017 with more than $12.8 billion of Fund income. Of that, more than $10.8 billion was available realized earnings.

More than $3.2 billion in statutory net income was added to the Earnings Reserve in 2017.

Historically, the Fund’s investment income has been only been distributed as dividends to Alaska residents based on a statutory formula.

In the weeks since the end of the state fiscal year, the Fund has continued to grow to more than $60.6 billion as of Aug. 21, according to the corporation’s unaudited results.

Permanent Fund Board of Trustees Chair Bill Moran said in an APFC release that the “high mark is a testament to the Alaskans who had the foresight to create the Fund, the leaders of yesterday and today who have maintained the integrity of the Fund and the dedicated professionals of the Alaska Permanent Fund Corp. who have attentively invested the Fund.”

CEO Angela Rodell said the Permanent Fund has gained international recognition “as a model for converting a non-renewable (oil) resource into a renewable financial resource.”

The strong 2017 results counter fiscal 2016 when volatile public financial markets kept Fund growth at a modest 1.35 percent.

Gov. Bill Walker’s administration and many legislators have pegged a long-term return average of 6.9 percent as a foundational assumption for starting to spin off about 5 percent of the Fund’s annual value to support government services and continue to pay out annual dividends in the $1,000 to $1,200 range.

Doing so could sustainably provide up to about $1.8 billion per year to reduce the state’s deficits, they contend.

The below-average 2016 put the Fund’s three-year return average below the 6.9 percent target at 6.18 percent, but the corporation’s active management still greatly out produced passive benchmark investments of 60 percent stocks, 30 percent bonds and 10 percent real estate and inflation-protected securities that would have returned 3.37 percent over that time.

Over the previous five years the corporation’s management has produced an 8.94 percent return, compared to a projected passive return of 7.10 percent.

The 2017 performance was led by a roughly 20 percent return on the $26.1 billion of the Fund invested in public equities, or stocks.

For rough comparison, the Dow Jones Industrial Average closed Aug. 22 up 18.19 percent over the previous 12 months.

Another nearly $7 billion invested in private equities returned 20.98 percent and the Fund’s $5.5 billion of real estate investments earned 4.45 percent, according to the corporation’s June performance report.

Infrastructure and private credit investments averaged roughly 9 percent paybacks, while $11.7 billion in fixed income assets naturally yielded more modest returns.

Elwood Brehmer can be reached at

More in News

Clem Tillion of Halibut Cove poses for a photo on Jan. 9, 2020, in Homer, Alaska. The veteran Alaska legislator was passing through Homer while waiting to take the M/V Tustumena ferry to Kodiak. (Photo by Michael Armstrong/Homer News)
Clem Tillion, PFD founder and former legislator, dies at 96

Tillion died Wedneday, Oct. 13, at Halibut Cove home.

Thunder Mountain High School on April 18.  Earlier this fall, vandalism including stolen soap dispensers and toilets clogged with foreign objects such as paper towel rolls were a problem at schools nationwide and in Juneau. But, principals say the local situation is improving. (Ben Hohenstatt / Juneau Empire File)
After brief surge, vandalism subsiding at local high schools

Principals say internet trends, stress likely behind incidents.

In this Jan. 8, 2020, photo Sen. Lisa Murkowski, R-Alaska, heads to a briefing on Capitol Hill in Washington. An Alaska man faces federal charges after authorities allege he threatened to hire an assassin to kill Murkowski, according to court documents unsealed Wed., Oct. 6, 2021. (AP Photo/J. Scott Applewhite,File)
Delta Junction man faces charges over threatening Murkowski’s life

Authorities allege he threatened to hire an assassin to kill the senator.

Donna Aderhold recites the Homer City Council oath of office and is sworn in for duty at the city council meeting on Oct. 11. (Photo by Sarah Knapp/Homer News)
New council members sworn into duty Monday

Newly-elected Homer City Council members Shelly Erickson and Jason Davis and re-elected… Continue reading

Runners participate in boys varsity race at the Ted McKenney XC Invitational on Saturday, Aug. 21, 2021, at Tsalteshi Trails just outside of Soldotna, Alaska. The trails recently reported incidents of vandalism and theft. (Photo by Jeff Helminiak/Peninsula Clarion)
Vandalism and theft reported at Tsalteshi Trails

One trail user reported stolen skis recently and multiple signs have been defaced.

At left Bonita Banks, RN, Medication Assisted Treatment (MAT) nurse at Homer Medical Center, and at right, Annie Garay, RN, Community Health Educator, pose for a photo at South Peninsula Hospital on Sept. 27, 2021, at Homer, Alaska. (Photo by Derotha Ferraro/South Peninsula Hospital)
New hospital community health educator starts

Garay, a Homer raised nurse, came home to ride out COVID-19, wound up doing pandemic nursing.

The logo for the Kenai Peninsula Borough School District is displayed inside the George A. Navarre Borough Admin Building on Thursday, July 22, 2021 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Montessori school goes to universal indoor masking

As of Tuesday, eight KPBSD schools were operating with universal indoor masking for staff and students.

Commercial fishing and other boats are moored in the Homer Harbor in this file photo. (Photo by Michael Armstrong/Homer News)
Seawatch: Crabbers look at cuts to quotas

Tanner, opilio crab quotas cut on top of cancellation of fall king crab fishery.

Gavel (Courtesy photo)
Judge sides with psychiatrists who alleged wrongful firing

Two psychiatrists said they were wrongfully fired when Alaska Gov. Mike Dunleavy took office.

Most Read