Alaska SWF’s transport bet drives double-digit infra returns

The $66bn Permanent Fund Corporation has just committed to Morgan Stanley’s new India fund and co-invested alongside the manager in the North American midstream sector.

The Alaska Permanent Fund Corporation’s transport-heavy infrastructure portfolio is posting double-digit returns, leading the sovereign wealth fund’s private income and real-assets strategies.

APFC’s $2.36 billion infrastructure portfolio, based on net asset value, is returning 22.9 percent as of 30 June and 21.5 percent and 16.4 percent over three- and five-year periods, respectively. Established 12 years ago, the portfolio is weighted toward transportation and power, with most assets located in Continental Europe and North America.

The outperformance comes as the $65.7 billion sovereign wealth fund ramped up its exposure to the asset class, committing $75 million to a Morgan Stanley infrastructure fund targeting investments in India. It also co-invested $50 million alongside the manager in North American energy company Brazos midstream.

GIP bump

At the end of 2017, commitments to Global Infrastructure Partners’ first fund were having the most positive impact on the infrastructure portfolio’s returns, which is still true as of 30 June. GIP I returned 44.67 percent for the fiscal year ending 30 June – around 7 percentage points less than what APFC reported for 2017.

Infrastructure falls under Alaska’s real assets and private-income portfolio, which as of 30 June, stood at $7.9 billion, 11.8 percent of the sovereign wealth funds’ total portfolio for the fiscal year. Infrastructure now accounts for 3.6 percent of the fund’s total portfolio, up from 3.3 percent, or $2.13 billion, at the end of last year.

The asset class is leading the pack among APFC’s private income and real assets strategies, followed by private credit (8.8 percent); real estate (7 percent); and income opportunities (1.9 percent).