US - The Alaska Permanent Fund Corporation (APFC) Board has scrapped some of its alternative investment plans following the corporation's decline in value in 2008.
The APFC has abandoned plans to invest $250m (€196m) in the Alinda Infrastructure Fund II and $400m in a mid-cap private equity fund managed by Pathway as part of its reviewed investment strategy to focus more on core asset classes after dropping approximately $10.01bn in value to $29.29bn.
A spokeswoman for the APFC, said: "The reason we pulled back had nothing to do with our commitment to alternative investments or these particular managers, its simply a reflection of the change in our overall fund value in the last year and the resulting need to keep our core asset allocations within their target bands. It's the denominator effect at work."
The Alinda Infrastructure Fund II had aimed to raise $3bn in equity by October 2008 and planned to invest 75% of the fund in North America with the remaining 25% in Europe, and in a variety of infrastructure investments such as transportation, power plants and community facilities.
The two investments had previously been approved at the APFC's board meeting on 24 July 2008, but the APFC's assets were valued at $29.29bn on 31 December 2008, down significantly from their $39.07bn value for 2007.
The APFC currently allocates 10% of the fund's total value to US real estate and focuses its investments in industrial, multi-family, office and retail properties.
At the end of 2008, the fund's real estate assets were valued at $3.03bn and had also targeted to invest 3% of its assets in infrastructure is 3%, though officials say there is no plan to change its strategy anytime soon.
"We are not making any changes to our real estate strategy, nor are we planning on disposing of any of our current infrastructure investments," said the spokeswoman.
The fund's target allocation to alternative investments is 8%, of which half is invested in absolute return strategies like hedge funds and half in private equity. Alternative investments are currently valued at $2.9bn.
During the two-day conference held in Juneau last week, Michael O'Leary, executive vice president at Callan Associates, outlined a five-year capital market outlook to help the corporation determine what changes it may need to make to its asset allocation in the coming months.