Key Takeaways
- Geography: United States.
Analysis
With the Permanent Fund valued at $80.8 billion as of March 31, 2025, the Fund reported a year-to-date return of 4.55%, outperforming its performance benchmark by 29 basis points and surpassing passive and real return indices over a five-year horizon. Despite falling short of the 5.5% Return Objective for FY25, long-term results reflect strong relative performance, with a five-year return of 10.49%.
The Board unanimously voted to maintain existing asset allocation targets for FY26, reinforcing its long-term approach while acknowledging the ongoing market volatility. The targets remain: 32% Public Equities, 20% Fixed Income, 18% Private Equity, 11% Real Estate, 10% Private Income, 7% Absolute Return, 1% Tactical Opportunities, and 1% Cash.
Strategic refinements were also approved, including reduced Tracking Error (TE) limits for Public Equities and Fixed Income—aimed at minimizing portfolio volatility while retaining capacity to outperform. Public Equities TE will decline from 350 to 200 basis points by year-end 2025, and further to 100 bps by 2026. Fixed Income TE will follow a similar path, dropping to 75 bps by end-2026.
Within the Real Estate asset class, the Board authorized major shifts, including reducing direct real estate holdings by 50% over five years and updating the benchmark to ‘Expanded NPI’ while capping REIT exposure at 10%.
The Private Income portfolio, which has generated over $5.4 billion since inception, will continue to expand its co-investment approach to enhance returns and reduce fee loads. Infrastructure and private credit remain key themes in this strategy.
The FY26 budget was approved in alignment with the APFC’s strategic priorities, alongside a reaffirmation of the Board’s commitment to annual inflation-proofing of the Fund’s Principal under statutory guidelines.
A new member, Janet Becker-Wold, CFA, joins the Investment Advisory Group (IAG), following the departure of Britt Harris. The Board emphasized its gratitude for Harris’s service and expressed confidence in Becker-Wold’s expertise.
Risk and compliance evaluations confirmed that the Fund remains well within approved risk tolerances, with healthy geographic and currency diversification, and robust internal controls. The Board also reviewed cybersecurity protocols and fiscal updates through its Ethics, Audit & Cybersecurity Committee.
Looking ahead, the APFC Board plans further analysis of long-term asset allocation strategy through a new working group and will reconvene on September 2, 2025, to continue steering Alaska’s sovereign wealth fund with prudence and purpose.