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Alternative Market Briefing

Alaska’s Permanent Fund gets out of funds of funds, builds in-house team to select hedge funds

Wednesday, June 29, 2016

Komfie Manalo, Opalesque Asia:

The $53bn wealth fund Alaska’s Permanent Fund Division on Tuesday said it would pull-out its entire $2bn portfolio in funds of hedge funds and instead manage the money in-house, reported Bloomberg.

Marcus Frampton, director of private markets at Alaska Permanent Fund Corp., said the wealth fund will exit all its investments in Crestline Investors, Mariner Investment Group and Lazard Asset Management. As an alternative, Alaska has created a five-person team to select hedge funds.

Frampton told Bloomberg, "We’ve decided to move to a 100 percent direct program. We now have the depth of staff and this is an area we want to have some focus on and we are set up to do it directly."

The move of Alaska to exit all its funds of hedge funds investments was aimed at reducing the cost of fees it is paying managers amidst poor performances of such funds. Data from data provider Hedge Fund Research showed that the Fund of Funds Composite Index declined 0.3% in 2015 and is down 3% in the first quarter of this year.

However, Frampton said Alaska’s funds did "a very good job" and "no worse than the industry." Crestline is down 1.6% in Q1, while Mariner and Lazard fell 1.4% and 1.2%, respectively.

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