Lessons From A Sovereign Wealth Fund in the United States (Correct)

Marcus Frampton (0:02)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, we're back here in New York City, where it's warm, and the sun sets at a normal hour of the day, and I don't need to have blackout curtains, but I had a really good time on our recent voyage to Alaska.

Tracy Alloway (0:36)

Alaska was great. I don't know why the overall state population has been declining.

Joe Weisenthal (0:41)

Yeah, I don't, it's great.

Tracy Alloway (0:43)

You move there, there's nice weather, at least in the summer.

Joe Weisenthal (0:46)

In the summer.

Tracy Alloway (0:47)

Beautiful scenery, as much salmon as you can fish out of the rivers, and every year you get paid some money by the state.

Joe Weisenthal (0:56)

Yeah, that's exactly right. No, there's a lot to like about it. I think it's for a type of person. It certainly has a lot going for it. But it was really nice, you know, I didn't really know much about Alaska. I didn't have much feel for its layout, I didn't have much feel for its geography. I truly did feel like I was sort of at the far western edge of the empire, out there, very, very distant.

Tracy Alloway (1:15)

It has a very frontier feel. I mean, that's why they call it the last frontier.

Joe Weisenthal (1:19)

Extremely frontier feel. And of course, we talk to people in all kinds of industry there, et cetera. But as you mentioned, one thing that people know about Alaska, I mean, people know there's oil, and also people know that there is something that kind of resembles perhaps a sovereign wealth fund, and also that every citizen over, I think, the age of like 18 months or whatever, 10 months or so gets a check from the state, which sounds pretty nice.

Tracy Alloway (1:40)

It sounds nice. It also sounds like a loaded political and financial hot potato, right? And I can imagine every year, there is probably lots and lots of debate about exactly how much is going to be dispersed, what it means for the future of the fund, how it interacts with state and federal funding. I'm excited to talk about all of that, but I think we should also add that this has new relevance, right, to the wider United States of America, because there is talk about starting a US sovereign wealth fund, and there is also the payments for kids, for infants, from the Trump administration.

Joe Weisenthal (2:14)

That's right, that's right. Whether anything at the federal level that resembles a sovereign wealth fund or any sort of fund would actually happen, who knows. But we have certain models of all this stuff, and it's worth learning a little bit more how they work, and I do think to sort of conclude our intellectual journey and our literal journey to Alaska, we sort of have to touch on this element.

Tracy Alloway (2:33)

Absolutely, let's do it.

Joe Weisenthal (2:35)

Okay, well, I'm really excited to say we literally have the two perfect guests to talk about the Alaska Permanent Fund and what it is. We're going to be speaking with Marcus Frampton. He is the CIO of the Alaska Permanent Fund, and Deven Mitchell, CEO of the Alaska Permanent Fund. So Marcus and Deven, thank you so much both for coming on the Odd Lots podcast.

Marcus Frampton (2:53)

Yeah, thank you. We're happy to be here.

Joe Weisenthal (2:55)

Why don't we start with maybe one of you could just give us the very quick, like, what is the size of the fund and how, when and why was it started?

Deven Mitchell (3:06)

So this is Deven Mitchell and I'll take that question. When you think about Alaska and you guys have just a small sample of Alaska, of course, when you think about it, you went to the largest city in Alaska, but if you superimposed Alaska over the continental US, you would have each of the coast touched by Alaska, as well as the southern and northern borders.

Joe Weisenthal (3:28)

That's crazy.

Deven Mitchell (3:28)

So it's a huge state. Let's say you went to Nebraska. So you didn't really experience all that Alaska has to offer, but certainly, it sounds like you got a good sample. The state's a young state. We became a state in 1959, and when Alaska became a state, there was a lot of concern about the ability of Alaska to support itself economically because of a relatively small population, remote location, lack of understanding about the state. The state was created as a resource state, meaning that the state retained the subservice mineral rights of the land in Alaska that it selected at statehood. And so in 1968, Prudhoe Bay was discovered, the largest oil field in North America. And the next year in 1969, there was a lease sale that generated $900 million of revenue for the state. And this is at a time when the state's budget was $150 million. And so an incredible amount of money for the day for the state. People thought it was so much money they couldn't possibly spend it all.