Alaska Permanent Fund Makes Headway in Tapping New CIO

(October 11, 2011) — The $36.7 billion Alaska Permanent Fund Corporation (APFC) — which won aiCIO’s 2010 Industry Innovation Award in the Sovereign Wealth Fund category — is close to hiring a new chief investment officer.

The top candidates, according to Juneau Empire, are Maria Tsu of Anchorage and Jay Willoughby of New Jersey.

Either will replace the Permanent Fund’s former CIO Jeffrey Scott, who announced in June that he would depart from the sovereign wealth fund to join Seattle-based consulting firm Wurts and Associates — which advises over $34 billion in institutional assets — to lead its discretionary investment practice. According to the newspaper, both Tsu and Willoughby said they’ll reside in Juneau and work from the corporation’s Goldbelt Place headquarters.

While Willoughby was previously a Merrill Lynch equities manager with senior investment management positions at hedge and mutual funds, Tsu is an in-house candidate who is currently and equities manager for the Permanent Fund.

“This is an amazing opportunity to work at a firm with a stellar reputation and a history of excellence,” said Jeff Scott in a press release before leaving the firm. “I’m excited to work with Jeff [MacLean, Wurts’ CEO] and his talented team to put a philosophy of risk-based asset allocation into practice. Wurts does a tremendous job of providing investment advice that takes into consideration macroeconomic trends and capital market valuations, and I believe the addition of a risk framework will help the firm challenge the conventional wisdom on how asset allocation decisions are made.”

Scott, who was based outside Seattle, split his time between Juneau and the Pacific Northwest. During his tenure at the Permanent Fund, Scott was the highest-paid state employee, earning $348,000 a year.

Earlier this month, the fund revealed that it would likely add to its infrastructure portfolio following a one-percentage-point increase in its allocation to the asset class. According to an APFC news release, the change was part of a larger asset allocation change that increased company exposure to 55% from 53%, increased infrastructure to 4% from 3%, and reduced special opportunities to 18% from 21%. Meanwhile, the sovereign wealth fund revealed in August that it gained 20.6% in fiscal year 2011. “We’re very pleased with the Fund’s performance this year – it’s been an outstanding year and we enjoy the chance to report such good news,” said Michael Burns, CEO, in a statement. “But at the same time it’s important to remember that the Board of Trustees and the staff do not chase returns. Our goal is a positive rate of return over the long term, and that’s our focus when we build a portfolio that doesn’t change in response to short-term market conditions.”