Frontier Finance: Juneau, Alaska

Ashby Monk

As I noted recently, the new players in global finance (i.e., SWFs) are coming from cities and regions without a history of financial services, which creates some real challenges for running a modern financial institution. From a research project perspective, I find this a remarkably interesting opportunity: How do you set up a world class institutional investor when finance has been something of an industrial afterthought in your country or city?

Anyway, one of these ‘frontier outposts’ is Juneau, Alaska, which is home to the Alaska Permanent Fund Corporation. And, this morning, I came across a neat little article by Katie Spielberger that offers a peak behind the APFC’s curtain to see how it actually operates in this distant location. Of particular interest was the way Chris Cummins, a senior portfolio manager, characterized the location of the APFC as an advantage:

“In the New York area there are a lot of people within the industry and there’s a lot of chatter … that subconsciously or consciously might influence your process…Being removed from it kind of gives you a clearer view where you can formulate your own thoughts and opinions … As Warren Buffett said, that was the benefit of being in Omaha, Nebraska.”

Chris is channeling Tony Gray’s book ‘A Thousand Miles from Wall Street‘, which argues that being outside of financial centers can offer portfolio managers much more clarity in their investment decision-making. Anyway, Chris went on to say:

“We’ve done a pretty good job. Over the past five years our fund, the fixed income portfolio, has outperformed 75 percent of like managers, so that’s pretty darn strong, doing that from a little place in Alaska…We’re proud of that. That’s important to us, that we put up some strong numbers.”

And you should be, Chris. Being on the frontier of finance isn’t all bad!

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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