Alaska Permanent Fund Corp., Juneau, approved a private markets pacing plan for fiscal year 2016, which starts July 1, and amended its infrastructure and absolute-return investment policies, said a news release from the $54 billion sovereign wealth fund.
Under the private markets pacing plan, approved at this week’s board meeting, $400 million total would be committed to infrastructure funds and co-investments in the fiscal year, with co-investments limited to $200 million. The infrastructure allocation could increase to $600 million “if market opportunities are compelling or decrease to as low as (zero) if attractive opportunities are scarce,” said documents prepared for the board meeting.
Additionally, $900 million total could be committed to private equity funds and co-investments in fiscal year 2016, with co-investments limited to $225 million. This allocation could increase or decrease by $200 million based on market opportunities.
Finally, up to $100 million would be allocated to private credit for the year.
As of March 31, Alaska Permanent had a 4%, 6% and 2% target allocation to infrastructure, private equity and private credit, respectively.
At the same meeting, the board approved broadening APFC’s infrastructure portfolio to include other real assets that have lows correlations to the fund’s other major asset classes, the news release said. The additions cover tangible and intangible assets such as timberland, agricultural farmland and leasable hard assets such as aircraft and railcars.
Changes were also approved for the absolute-return and real-return portfolios.
Specifically, the fund’s real-return portfolio, which is composed mostly of hedge funds and closely resembles the absolute-return portfolio, will be eliminated. Assets will be transferred to the absolute-return portfolio.
Second, to lower investment costs and prevent overdiversification, the staff will focus on making a “smaller number of more concentrated” absolute-return investments, the release said.
A spokeswoman could not immediately be reached for additional information on how the current absolute-return portfolio will be impacted.
As of March 31, APFC had a 6% target allocation to absolute return.