PFD checks could dip to near nothing, fund director warns (sale, rentals)

[blueflames50]

Alaska Permanent Fund Corp. director Mike Burns told the Senate Finance Committee today PFD checks this year could top $1,500 but may drop to as low as $68 in 2013 unless there are changes in the way dividends are managed.

any thoughts as to why these dividends are being mismanaged without going into the political hoopla???

[Barkingowl]

Aren't the checks tied to the price of oil?

[Moose Whisperer]

Originally Posted by Barkingowl

Aren't the checks tied to the price of oil?

Nope, the Permanent Fund is basically a giant mutal fund. The payout is like any other dividend, determined by market performace. Just like your 401k.

[Barkingowl]

Originally Posted by Moose Whisperer

Just like your 401k.

I hope its doing a lot better than my 401k.

[Moose Whisperer]

Originally Posted by Barkingowl

I hope its doing a lot better than my 401k.

Not really, it's down just as much as yours and mine. The only reason there will be a payout at all this year is that the dividend is calculated on a 5 year moving average. Since the last 4 were positive, there will still be a net payout this year. If it were only calculated on annual perfomance, we would all probably owe money to the fund, since the principal took a huge loss this past year.

[Barkingowl]

How is it decided how the fund proceeds are invested? Do Alaskans have any say at all?

[blue_eyedgirl]

Originally Posted by blueflames50

Alaska Permanent Fund Corp. director Mike Burns told the Senate Finance Committee today PFD checks this year could top $1,500 but may drop to as low as $68 in 2013 unless there are changes in the way dividends are managed.

any thoughts as to why these dividends are being mismanaged without going into the political hoopla???

Oh well, they are nice to get but I don't plan my year around them. I lived for 26 years without getting a PFD so if it drops that low then we'll just have to ride it out.

[Moose Whisperer]

Originally Posted by Barkingowl

How is it decided how the fund proceeds are invested? Do Alaskans have any say at all?

pretty much like any mutual fund, we have fund manager(s) in the PFD Corporation that take care of that stuff. In theory the Legislature and Governor are supposed to have input, but they are usually too busy squabbling to pay attention. For example, there's a big flap going on right now trying to make sure that none of the fund is invested in any company that has anything to do with Sudan. The Dems even tried to make that a national issue against Palin last year. But then the fund managers respond with:

where do you draw the line? If IBM Sells PCs in Sudan, are we prohibited from investing in IBM stock? Do you want to make money, or be politically correct?

[akck]

Originally Posted by blueflames50

Alaska Permanent Fund Corp. director Mike Burns told the Senate Finance Committee today PFD checks this year could top $1,500 but may drop to as low as $68 in 2013 unless there are changes in the way dividends are managed.

any thoughts as to why these dividends are being mismanaged without going into the political hoopla???

IMHO, they're using scare tactics to try to change the way the dividend is paid out. Currently, it's based upon a 5 year average of realized earnings. They want to go to a percent of market value model.

In looking at their own reports, he's off by a factor of 10. If the payout is $68, that would mean the dividend would be around $47 million. According to their own reports, the 2013 dividend is projected to be $487 million.

The dividend is not being mismanaged. What you're seeing is the result of current market conditions. Losses in the equity market and low interest rates are causing the decline. Even if they invested everything in bonds, they'd have a near zero income for the Fund.

[Glitch]

Originally Posted by Barkingowl

Aren't the checks tied to the price of oil?

The Permanent Fund consists of:

Alaska State Constitution Article IX, Section 15 - Alaska Permanent Fund.
At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law [Effective February 21, 1977].

The $27,106,500,000 in the Permanent Fund, as of yesterday, is invested as follows:

US Bonds: 27%
US Stocks: 21.8%
Real-Estate: 13.8%
Alternatives: 11.5%
Global Stocks: 10.7%
Non-US Stocks: 10.1%
Non-US Bonds: 4.1%
Alaska CDs: 1%

Source: Alaska Permanent Fund Corporation