Alaska Permanent looks to emerging markets

The Alaska Permanent Fund Board of Trustees was educated on the changing risk profiles of emerging-market debt at its meeting in February, with chair, Bill Moran, suggesting the asset class could have a greater role in the fund’s portfolio in the future.

The board reviewed presentations on emerging market debt presented by two of the corporation’s real-return managers, Goldman Sachs and PIMCO. They manage US$545 million and US$575 million for the fund respectively.

“Emerging market stocks and bonds have been included in the fund’s portfolios for some time now,” said Bill Moran (pictured), board chair. “However, we learned that the growth potential in emerging market countries, combined with the efforts toward transparency and stability these countries are making has lowered the overall risk for their corporate and government bonds. With rising debt levels and struggling economies in the developed markets, emerging market debt may have a greater role in the future.”

The fund, which has an unaudited value of US$39.5 billion, has held investments in emerging markets for some time now: more than 10 years for equities and five years for fixed income. The APFC’s high-yield bond managers also have the ability to invest in emerging market debt.  The fund does not have target allocations for emerging-market equity or debt.

At the meeting, the board also reviewed Callan Associates’ capital markets outlook and approved changes to the APFC by-laws and corporate governance charter to make the documents consistent with each other and with the investment policy.

The changes included adding duties assigned to the executive director in the governance charter to the by-laws as well and a clarification of the method for amending the investment policy.