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Alaska Permanent names new CIO; PE returns highest among all asset classes

  • AUM: $64.9 bln
  • Target allocation to PESO: 14 pct
  • Actual allocation to PESO: 11 pct
  • Actual allocation to PE: 7.5 pct or $4.9 bln
  • Whom to contact for a meeting: Paulyn Swanson (pswanson@apfc.org)
  • Why this is important: Alaska Permanent’s PE portfolio continues to be a top performing asset class

Alaska Permanent Fund Corp named its director of investments, real assets and absolute return, Marcus Frampton, chief investment officer.

Frampton, who joined Alaska Permanent in 2012, had taken over as interim CIO after Russell Read resigned in July to pursue an opportunity in London.

The search for CIO included outside candidates, and “after considering many highly qualified applicants for the CIO position, the board is convinced that Marcus is best situated to continue the remarkable success the Permanent Fund investment portfolio has recently experienced,” Craig Richards, chairman of Alaska Permanent, said in a statement.

Alaska Permanent’s private equity and special-situations strategies, led by Steve Moseley, returned 32.7 percent, beating the 18.3 percent benchmark for fiscal 2018.  Of this, PE returned 27.9 percent, the 2018 annual report said.

The sovereign fund’s PESO portfolio included buyouts (52.19 percent), venture/growth capital (24.02 percent), special situations (21.42 percent) and distressed/restructuring (2.35 percent).

Alaska Permanent added $1.9 billion in commitments to the PESO portfolio in 2018, including $163 million in direct/co-investments. It also sold $704 million of private-market assets on the secondary market in the fiscal 2018 fourth quarter, documents said.

Alaska Permanent’s PESO portfolio was largely U.S.-focused. Europe was the largest non-U.S. sector at 20.73 percent, documents said.

Technology accounted for 40.7 percent of the industry exposure in the sovereign fund’s PESO portfolio, consumer discretionary exposure was 15.33 percent and healthcare was 9.59 percent, documents said.

Meanwhile Alaska Permanent PESO’s $1 billion direct/co-investment programs produced an internal rate of return of 68.5 percent and a multiple of 2.8x for 2018, documents said.

The sovereign fund invested $1.1 billion in operating companies as part of its direct/co-investment program and gained $1.8 billion since program inception in 2013.

Alaska Permanent continued to support its portfolio companies by adding follow-on commitments in 2018. It also invested in new platforms across healthcare, energy, software and other industries in 2018, documents said.

Significant co-investments included Varo, Achieve3000, Banca Farmafactoring, and U.S. LBM.

Noteworthy direct investments included Indigo, Denali Therapeutics, Senvion, Juno Therapeutics and Premia.

Alaska Permanent’s $7.2 billion PESO portfolio returned 32.7 percent for fiscal 2018, 14.56 percent over three years and 23.84 percent over five years, as on June 30, 2018.

Action Item: Read Alaska Permanent Fund’s annual report here https://bit.ly/2zKCRe7