APFC Board hires absolute return managers, adopts allocation
The Alaska Permanent Fund Corporation Board of Trustees has hired two new absolute return managers, updating the fund's real estate investment policy and adding a global allocation to its asset allocation.
At their annual meeting in Anchorage on September 20 and 21, the Board of APFC hired Leman Brothers Alternative Investment Management LLC and Pacific Alternative Asset Management Company (PAAMCO), with mandates of approximately USD 200 million each.
The addition of these managers is the conclusion of a plan approved by the Board at the November 2005 meeting to expand the Permanent Fund's absolute return strategies allocation to 4%. In February 2006, the Board also hired two managers, Mariner Investment Group and Lazard Alternatives, LLC, with mandates of USD 200 million and USD 100 million respectively. The funding for all four mandates is from the Fund's internal bond portfolio.
The new managers join Crestline Investors, Inc., the first absolute return manager hired by the Board in 2004. Crestline's portfolio was worth USD 554 million at the end of the 2005 fiscal year on June 30, and had an annual return of 11.5%.
The Board also adopted changes to the two components of the real estate investment program: policy resolution, investment strategy. The documents were amended in part to conform to the new investment regulations authorized in January 2006, and include allowances for non-domestic real estate securities as well as formalizing policies for real estate project development.
Following presentations on the global approach to stock investments at the August meeting, the Board adjusted the Fund's asset allocation to include a 14% global allocation. A global approach allows managers to seek out the best investments, without having to remain within geographic boundaries. While the Fund has two global managers, UBS Global Asset Management and Lazard Asset Management, their portfolios were proportionally split between the Fund's existing domestic and non-domestic allocations.
As a first step, the portfolios of these two managers will be assigned to the new global allocation. This reassignment is not expected to have a material effect on the Fund's exposure to domestic and non-domestic stocks. The Board also authorized a search for additional global managers that may complement the Fund's existing managers.
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