123rf.com Stock Photo

123rf.com Stock Photo

Permanent Fund armored against downturn, analysis finds

The Alaska Permanent Fund Corporation took a $1.5 billion hit when American stock markets plunged last week, but fund managers said Wednesday that results of a recent stress test show the $64 billion fund is well-armored against even a severe stock market crash.

On Wednesday, the corporation’s Board of Trustees began a two-day quarterly meeting in Juneau and heard an update of the fund’s regular stress test and portfolio risk assessment.

According to the results of that assessment, a severe stock market crash — in this hypothetical, something that cost American investors 25 percent of the value of their stocks — would cost the fund 11 percent of its value.

“That would certainly be an event for the fund,” said Russell Read, chief investment officer of the fund, but the fund would fare better than an index of the entire market.

Early this month, American markets suffered an abrupt 6 percent decline. The Dow Jones Industrial Average, for example, dropped almost 3,000 points between Jan. 26 and Feb. 8.

After that, Read said, fund managers shifted their belief that stocks would continue to grow without volatility or inflation, something he characterized as “Goldilocks” — in a perfect spot, neither hot nor cold.

Now, Read said, things are “changing to growth with volitility and inflation.”

That’s not necessarily a bad thing, he said, but “not as good as we had before.”

According to the risk analysis reported to the corporation, there is even some upside for the fund under certain conditions. The fund’s portfolio — which includes real estate and other real assets — are less vulnerable to inflation than stocks and bonds alone. The fund also would do fare better than its contemporaries if U.S. or European interest rates rise, something that has become more likely in recent weeks.

The Board of Trustees meeting will continue through Thursday.

• Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 523-2258.

More in News

In this July 13, 2007, file photo, workers with the Pebble Mine project test drill in the Bristol Bay region of Alaska, near the village of Iliamma. (AP Photo / Al Grillo)
Appeals court panel orders review of EPA decision in Alaska

Review concerns decision to withdraw proposed restrictions on large-scale mining near Bristol Bay.

It's a police car until you look closely and see the details don't quite match. (Juneau Empire File / Michael Penn)
Police calls for Friday, June 18, 2021

This report contains public information from law enforcement and public safety agencies.

A former Juneau chiropractor who was indicted for multiple sexual assault charges in April was charged with more assaults in early June. (Michael S. Lockett / Juneau Empire)
Former chiropractor faces additional sexual assault charges

The former Juneau resident was indicted for five more felony charges early in June.

Interior Secretary Deb Haaland appears before the Senate Appropriations Committee, at the Capitol in Washington, Wednesday, June 16, 2021. (AP Photo/J. Scott Applewhite)
Senators press Interior Secretary Haaland on oil lease pause

Murkowski said she was flabbergasted that Haaland did not address the court ruling.

I have flies with barbell eyes, jig heads, cone heads, bead heads and no heads. I have flies with stinger hooks that trail and long-shanked salmon hooks that don’t. I have red, pink, salmon, fuchsia, cerise, purple, orange, flesh, green, olive, chartreuse, white and black flies made of feathers, chenille, hackle, marabou, flashabou and silicone. (Jeff Lund / For the Juneau Empire)
I Went to the Woods: One good fish

Three is the magic number.

This undated electron microscope image made available by the U.S. National Institutes of Health in February 2020 shows the Novel Coronavirus SARS-CoV-2, yellow, emerging from the surface of cells, blue/pink, cultured in the lab. Also known as 2019-nCoV, the virus causes COVID-19. THE CANADIAN PRESS/AP, NIAID-RML
COVID at a glance for Wednesday, June 16

The most recent state and local figures.

Louisiana Attorney General Jeff Landry speaks in front of the U.S. Supreme Court in Washington. The Biden administration’s suspension of new oil and gas leases on federal land and water was blocked Tuesday, June 15, 2021, by a federal judge in Louisiana. U.S. District Judge Terry Doughty’s ruling came in a lawsuit filed in March by Louisiana’s Republican attorney general, Jeff Landry and officials in 12 other states. Doughty’s ruling granting a preliminary injunction to those states said his order applies nationwide. (AP Photo / Manuel Balce Ceneta, File)
Federal judge blocks Biden’s pause on new oil, gas leases

The decision is a blow to Biden’s efforts to rapidly transition the nation away from fossil fuels.

It's a police car until you look closely and see the details don't quite match. (Juneau Empire File / Michael Penn)
Police calls for Wednesday, June 16, 2021

This report contains public information from law enforcement and public safety agencies.

Most Read