In its most recent meeting in Anchorage, the Alaska Permanent Fund Corporation amended its policy for infrastructure investment to include agricultural farmland and approved allocations for the 2016 fiscal year. The first of two amendments to the Corporation’s Investment Policy made by the board of trustees during the May 19 and 20 meeting, allows for investment in infrastructure that is uncorrelated to the Fund’s current infrastructure investments. With this change, the Fund’s managers can seek out both tangible and intangible asset investment opportunities, such as agriculture farmland and timberland, with similar risk and return profiles to traditional infrastructure investments.

 

A second policy amendment combines the Fund’s absolute return portfolio and real return portfolio, which is primarily comprised of hedge funds, under a single program. The policy updates also allow for the Fund’s investments to be made to a “smaller number of more concentrated investments to help lower investment costs and prevent over-diversification.”

 

In addition to policy amendments, the board for the $54 billion sovereign wealth fund approved infrastructure and other private investment allocations for the 2016 fiscal year, which begins July 1. These allocations, which are dependent on finding appropriate investments, include $400 million to infrastructure funds and co-investments, $900 million to private equity and $100 million to private credit. Both the infrastructure and private equity allocations could increase by as much as $200 million under the positive market conditions. Allocation decisions were made with a goal of a 5 percent average annual real rate of return over the long term in mind.

 

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