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Alaska SWF beats target return by 2pc
Tuesday, 3 August 2010 12:15pm

The Alaska Permanent Fund returned nearly 12 per cent for the financial year to June, 2 per cent higher than its target return due to its non-government bond and US stock investments.

The sovereign wealth fund (SWF) returned 11.8 per cent for the financial year to record a $36 billion closing balance.

Only one of the fund's asset classes posted a negative outcome. Michael Burns, chief executive at the SWF, said the investment team is especially pleased with its bond portfolio.

The Alaska Permanent Fund's US fixed income portfolio returned 11.5 per cent for the financial year as the Barclay's Aggregate Bond Index posted 9.5 per cent.

"Last year our in-house team made a significant rebalance to high quality non-government bonds when the markets were still uneasy," said Burns.

"As investors returned and spreads narrowed, they sold off a good number of those bonds, harvesting the underlying gains and producing the outstanding returns."

The fund's US stock portfolio returned close to 16 per cent while the non-US portfolio returned close to 12 per cent. The global shares portfolio posted similar returns of over 11 per cent.

While the real estate portfolio returns aren't available until September, initial indications suggest the return will be flat for the financial year.

A flat return isn't bad, the fund noted, considering the condition of the US commercial property market.

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