The Alaska Permanent Fund returned 5.6 percent for the second quarter of the fiscal year, according to unaudited figures released Jan. 22. The fund's total value also crossed the $37 billion mark for the first time in January.
The second-quarter earnings brings the return for the fiscal year-to-date to 9.6 percent, the Alaska Permanent Fund Corp. said in a statement. The fund grew by $2.1 billion in the quarter, ending Dec. 31 with an unaudited value of $36.4 billion, the corporation said.
The stock rally that started mid-year continued through the second fiscal quarter, and the fund's stock portfolios contributed the most to the total return. Non-domestic stocks were the strongest asset class in the fund, returning 11.4 percent, and domestic stocks returned 6.9 percent, according to the corporation.
“Continued economic expansion brought better than expected growth in the European markets. When combined with strong returns from emerging markets, non-domestic stocks almost doubled the return on domestic stocks,” corporation president Mike Burns said.
“A number of factors may have created the economic environment that allowed for the domestic side of the rally. The Federal Reserve held firm on short-term rates, and declining oil prices and a mild start to the winter may all have eased inflation fears,” he said.
“In this pleasant but unusual environment, all of the fund's asset classes had positive returns for the quarter, including real estate, returning 4.2 percent for the period. Domestic and non-domestic bonds returned 1.3 percent and 1.2 percent, respectively. Absolute return gained 4.7 percent,” Burns said.
The fund has earned $1.9 billion in statutory net income in the first half of fiscal 2007. The permanent fund dividend, issued to all Alaskans, is calculated using an average of statutory net income over five years, and the value from fiscal 2002 that falls out of this year's calculation is $257 million. As a result, at this time dividends are expected to be higher this fall.
The fund's significant growth in the second fiscal quarter helped it reach a new milestone in January. The total unaudited value of the Permanent Fund grew past $37 billion for the first time Jan. 12, and hit a record high of $37.28 billion on Jan. 24.
