Odd Lots Lessons From the One Sovereign Wealth Fund in the United States
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Aug 18, 2025 Deven Mitchell, CEO, and Marcus Frampton, CIO of the Alaska Permanent Fund, discuss the unique dynamics of the only sovereign wealth fund in the U.S. They delve into the fund's origins, driven by Alaska's oil boom, and its vital role in supporting the state's budget with annual resident dividends. The duo shares insights on adapting investment strategies amidst fluctuating oil prices and the legal complexities tied to fund management. They also explore Alaska's potential as a renewable energy hub, emphasizing sustainable stewardship for future generations.
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Origin And Purpose Of The Fund
- The Alaska Permanent Fund was created from 1970s oil revenues to benefit future generations and is constitutionally protected.
- Its earnings were meant to be invested and used for the state's long-term fiscal health.
Modern Portfolio And Return Target
- The fund evolved from fixed income to a diversified portfolio with 40% alternatives and global equities as the largest class.
- It targets inflation plus 5% to support roughly a 5% annual distribution to the state.
Use Rules-Based Draws
- Hold unrealized gains in principal or an earnings reserve and only appropriate realized earnings to protect capital.
- Use a rules-based draw (historical five-year average 5%) to smooth transfers to the state.