The Haines Borough Assembly is considering whether it should raise the cap on permanent fund stock investments from 25 to 50 percent.
The ordinance, which the assembly introduced last week, would only raise the potential amount of the fund that can be invested in stocks. It won’t actually increase the borough’s investment in stocks, said chief fiscal officer Jila Stuart.
“The finance committee wanted to increase the cap placed on equities in the code, but that will not change our asset allocation. It simply allows for a change,” Stuart said. The assembly can make changes in investment strategy by resolution.
Stuart said the borough permanent fund, which currently holds more than $8 million, has traditionally been invested conservatively in fixed income investments rather than stocks.
Currently, 80 percent of the fund is invested in government bonds, 15 percent is in the stocks of large companies (like Microsoft, Wal-Mart and GE) and 5 percent is invested in stocks of companies not based in the United States.
“While protecting the principal of the fund is paramount, we give up yield (income) when we invest too conservatively,” Stuart said.
The Alaska Permanent Fund is 36 percent stock, Stuart said. Juneau’s long-term investment portfolio is 49 percent equity and Valdez’s is 40 percent equity.
The borough permanent fund holds and invests income generated by borough land sales.
The ordinance has its second public hearing Tuesday.