Alaska Permanent Fund Ready for Hedge Funds

JUNEAU, Alaska (HedgeWorld.com)–Officials charged with managing the US$28 billion Alaska Permanent Fund will vote May 26 on which hedge fund manager or managers will be part of a pilot hedge funds investment program.

The board of the Alaska Permanent Fund Corp. has scheduled a meeting for Wednesday, at which one of the topics for discussion is a review of hedge fund managers. At that meeting, the board may hire one or more managers to participate in an absolute return pilot program, through which the fund would invest as much as 1% of its assets in hedge funds for 36 months. After that time, the board would have to re-authorize the investment.

Permanent Fund officials announced in March they were starting a three-year pilot program to invest in absolute return strategies. The program includes a 1% target allocation to absolute return strategies.

Board members began learning about hedge funds in May 2003 and during the intervening months heard presentations from a number of hedge fund firms, including McKinley Capital Management Inc., Anchorage, Ala., and Quellos Capital Management LP, Seattle, as well as the fund’s consultant, Callan Associates Inc., San Francisco.

Robert Storer, executive director of the fund, has said the hedge fund program will be conservative, targeting a risk level comparable to U.S. Treasury bonds.