House money: Alaska Permanent Fund Corporation investments grow more and more diverse.

• Author: Loy, Wesley
• Position: FINANCIAL SERVICES - Company overview

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This summer saw an exciting development for the Alaska Permanent Fund Corporation (APFC). On August 1, a California-based company, American Homes 4 Rent, opened for trading on the New York Stock Exchange following a lucrative initial public offering.

The listing crowned the company's rapid growth, with APFC coming along for the ride as an early investor. American Homes 4 Rent now ranks as APFC's top stock holding, larger even than its positions in Microsoft, Pfizer, Exxon Mobil, and other corporate giants.

Not so many years ago, betting on a relatively obscure venture such as American Homes 4 Rent would not have been a consideration for APFC.

Through most of its history, the state's oil wealth savings account had managed its assets conservatively, plowing money into straight-forward bond, stock, and real estate investments.

In recent years, however, this approach has changed dramatically, with APFC leadership venturing increasingly into more creative investments. Now, an IPO is just one of many sorts of sophisticated deals for APFC.

The watchword for APFC managers is diversification. They are continually looking to spread APFC's assets across a wide range of investments so that if any one bet loses big, the others hopefully won't. The goal is nice, steady growth, without too much boom or bust.

It's hard to argue with the APFC's formula thus far. In February, the fund value closed above $45 billion for the first time. For FY 2013, the fund returned nearly 11 percent.

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APFC, based in rain-sodden Juneau, is four times zones and seemingly a world apart from Wall Street.

A six-member board of trustees, appointed by the governor, sets fund policy. APFC's executive director, Michael Burns, is former president of KeyBank of Alaska.

The Prudhoe Bay discovery in the 1960s inspired creation of a fund to save some of the state's extraordinary oil wealth. In 1976, Alaska voters overwhelmingly approved a constitutional amendment establishing the Alaska Permanent Fund.

It's not unique. Many so-called sovereign wealth funds exist around in the world, some holding considerably more assets than Alaska's fund. Examples of other sovereign wealth funds include Norway's petroleum fund, Alberta's Heritage Fund, and Wyoming's Permanent Mineral Trust.

Part of the Permanent Fund's investment earnings are used to pay qualified Alaska residents a dividend each year. Last year's dividend was $878.

While the dividends are...