Alaska Permanent Fund: Meaning, Dividends, Investments

What Is the Alaska Permanent Fund?

The Alaska Permanent Fund is a state-owned investment fund established in 1976 after the discovery of oil in Prudhoe Bay. Created to benefit current and future Alaska residents, the fund invests surplus revenues from the state's oil and gas reserves and distributes annual dividends to eligible residents. As of December 2024, the fund's value was almost $83 billion. 

Understanding the Alaska Permanent Fund

The Alaska Permanent Fund is a state-level SWF that invests across different asset classes, including domestic stocks, U.S. bonds, global stocks, real estate, and private equity.

The Alaska Permanent Fund Corporation, as its name suggests, manages the fund. After the Trans-Alaska Pipeline System was completed in 1976, bringing Alaskan oil into the world market, the state added a constitutional amendment setting aside a share of oil revenues for future generations of its citizens. The revenues from these reserves form the basis of the Alaska Permanent Fund.

The state constitution mandates that at least 25% of all mineral-related revenues—including lease rentals, royalties, sales proceeds, federal revenue-sharing payments, and bonuses—are to be preserved in the fund for future generations of Alaskans.

Dividends of the Alaska Permanent Fund

The fund pays Alaskans annual dividends, the Permanent Fund Dividend (PFD). To qualify, Alaskan residents must have lived a full calendar year in the state and must intend to remain there.

The 2024 dividend was $1,702, comprising a $1,403.83 standard payment plus a $298.17 energy relief payment—a $390 increase from 2023. While the government sets this amount based on oil revenue investment returns, the PFD serves for many in the state as a limited amount of universal basic income.

Investments in the Alaska Permanent Fund

For its 2025 investment target, the fund estimates that 32% of its capital will be invested in stocks, with another 20% in fixed income. After that, investments will be made in private equity and special opportunities (18% of capital), real estate (11%), and private income, infrastructure, and credit (10%).

As these holdings show, the fund is diversified, and the fund's managers set a goal of an average annual return of 5% or more. As of December 2024, the fund's average annual returns for the previous five years were about 8.25%.

Other Sovereign Wealth Funds

There are nine states besides Alaska that have SWFs. These funds help finance specific services or add to the state's general revenue for expenditures in the annual budget. The states that have SWFs include Alabama, Alaska, Louisiana, Montana, New Mexico, North Dakota, Oregon, Texas, Utah, West Virginia, and Wyoming.

A SWF consists of pools of money derived from a country or state’s reserves that's set aside for investment purposes with the explicit claim, at least, to benefit the country or state’s economy and citizens. Funding derives from central bank reserves that accumulate as a result of budget and trade surpluses. Additional revenues, as in Alaska, can come from the sale of natural resources.

The world's largest sovereign wealth funds include Norway’s Government Pension Fund, China’s China Investment Corporation, and the United Arab Emirates’ Abu Dhabi Investment Authority.

The Bottom Line

The Alaska Permanent Fund is a state-level SWF created to save a portion of the state's oil revenues for future generations of Alaskans. It represents a unique approach to managing resource wealth, focusing on intergenerational equity and economic stability by providing residents with an annual dividend and basic income floor.