Monday, September 28, 2015

Alaska Should Aggressively Pursue Investment Returns

The Alaska Dispatch is owned by Alice Rogoff Rubenstein, wife of Carlyle Group co-founder David Rubenstein.  Harvard Economist Kenneth Rogoff recently weighed in with a column in the Alaska Dispatch.  It stated:

Alaska has a sovereign wealth fund slightly in excess of 100 percent of state GDP, more than enough to cover both state debt of about 20 percent of GDP (even including local debt) and unfunded state pension liabilities. 

There is certainly scope to manage the sovereign wealth fund somewhat more aggressively, at the very least the amount in excess of the state’s debt. Other resource-dependent countries like Norway try to strike a balance between risk and return. It would probably behoove Alaska to look at other sovereign wealth funds and how they are managed.
Rogoff recommends rolling the dice on 80% of the funds assets, which generally means private equity.  Numerous Middle East sovereign wealth funds invest with The Carlyle Group.  Carlyle co-founder David Rubenstein regularly visits Alaska.  Rogoff's piece closed with a short bio:

Kenneth Rogoff is a professor of economics at Harvard and former chief economist for the International Monetary Fund. He is the cousin of Alaska Dispatch News owner and publisher Alice Rogoff.
Rogoff did not mention public pension funds which have questioned private equity's outsized fees that damper returns.  Kenneth Rogoff went for the happy comparison.  

It's all in the PEU family, where image counts for much.