On August 3, Alaska PFC reported its best ever annual performance, with a 29.7% return, and an all-time peak AuM of US$ 81.1 billion. A month before that, it had unveiled its strategy up to June 2025, when it expects private markets to rise to 40% of its portfolio. We had the immense pleasure of talking with Ms. Angela Rodell, who on October 1 will stand as the world’s only female CEO of a SWF.
[GSWF] Since 1982, APFC has been the only SWF to distribute dividends to its citizenry, having spent over US$ 26 billion in 40 years. What do you think of this?
[APFC] Dividends are important for Alaskans, given their relatively high cost of living and education. However, I am not sure the program has protected the Fund over the years, and I think it is important to recognize the trade-offs of such a program. It is a controversial issue, and there is a significant debate around the dividends’ future. It proves the misalignment that can exist between the many stakeholders when the traditional uses of the Fund and the state’s revenue generation needs become conflicting interests. APFC’s mandate is to manage and invest the assets; however, the politics around the use of the Fund can make it challenging.
[GSWF] APFC had a record return in FY21, with public equities yielding 47% and private equity, 65%. How often do you value private market investments?
[APFC] We value our private equity portfolio quarterly with a quarter lag – so that 65% performance is lagged back to March 31, and those valuations are audited on an annual basis.
[GSWF] You are expecting to increase your weight into private markets from today’s 31% to 40% in FY2025. Why?
[APFC] The main reason is to aim at maximizing returns while reducing volatility. Private Equity has been a very good asset class for us and we want to keep a strong exposure to it. Our target is to achieve a CPI + 5% return in a ten-year horizon, and we are not alone in the belief that public markets are not going to perform as strongly as private markets will in the next ten years.
[GSWF] RE is mostly internally managed – why do you rely heavily on external managers when it comes to PE?
[APFC] RE was our first asset class after public markets and it was built internally. However, PE came after and is hard to recruit into, especially to Alaska, so we don’t expect this dependence to change in the future. Capital Constellation, a global partnership, was not easy to get started (two years in the making). We are usually more comfortable with LP-GP relationships than with JVs.
[GSWF] Our GSR Scoreboard highlighted your little work around Sustainability (40%). Is this a priority for APFC?
[APFC] Our Board is focusing on the sustainability of the Fund to benefit all generations of Alaskans and maximizing investment returns into perpetuity. We look at companies that will be around for a long time, so in a certain way, sustainability is already factored into our investment decision process – so having dedicated ESG teams and goals does not resonate with us.
[GSWF] You lead a slim SWF with 57 staff, all based out of Juneau. Do you expect to open an office overseas?
[APFC] I do not envision opening an office out of Juneau in the future, but COVID-19 has taught us a lot about remote working, and Alaska PFC adopted a new and flexible work policy last December. This will help us in our recruitment efforts and with the growth of the Fund as an organization. We are hoping to resume our recruiting campaign in September.
[GSWF] After Temasek’s Ho Ching departure, you’ll be the world’s only female CEO of a SWF. What do you think the industry needs for more inclusion and gender equality?
[APFC] We need to keep working on our unconscious bias. Our HR now removes any reference to gender and bias and we need to figure out a way to attract and retain female talent. Boards hiring the CEOs are very political, and SWFs sit in environments and countries where this is a heavy lift for women.
[GSWF] Lastly, what do you make of the past six years leading Alaska’s SWF? What are your personal goals for the next six years?
[APFC] If you look at the corporation level – how we’ve grown, the teams that we’ve built, the resources that we’ve been able to procure, etc. – our success has been phenomenal. But I hope we continue to stay humble and not take it for granted. We have hugely benefited from a bullish market, and I keep waiting for the moment the market crashes and stays down. For the next six years, I hope that we settle the issue of the dividends, and the State of Alaska can share a common vision on how to use the Fund. I also hope to continue building up our teams and having a succession plan in place, making sure that we build something sustainable and lasting.