Two top Alaska Permanent Fund Corp. managers who headed up a highly publicized restructuring of the state’s $40 billion savings account are leaving the fund.
News of the decisions by Jeffrey Scott, the fund’s chief investment officer, and Max Giolitti, its chief of asset allocation and risk management, became public Monday.
Mike Burns, the permanent fund’s executive director, said he was “surprised” by Scott’s decision to leave.
Sen. Bert Stedman, R-Sitka, said Scott’s departure after 2 1/2 years did not provide the state with the stability it needed in that position.
“It’s nice to have a little longer tenure in your investment guys, there’s no doubt about that,” Stedman said.
Stedman, co-chairman of the Senate Finance Committee, also works as a financial planner.
As chief investment officer of the state’s biggest savings account, Scott played an important role in its management.
That was reflected in his $348,000 annual salary, higher than Burns’ and among the very highest in state government.
He will join Wurts & Associates, a Seattle investment management group, that company announced Monday. Giolitti will also be joining Wurts.
Burns said Scott told him of the decision to leave last Wednesday.
Scott’s commitment to Alaska has been called into question before, when legislators raised concerns about his claim to live in Alaska.
Scott told a legislative committee overseeing the permanent fund in 2009 that he was now an Alaska resident.
“I wasn’t a citizen of Alaska before, but I am now,” he said.
It is not clear, though, that Scott ever really moved to Alaska, though he did rent a condo near the permanent fund’s headquarters. He declined Empire requests at the time for evidence supporting his claim of Alaska residency.
Scott blamed difficulty in selling his Snoqualmie, Wash., house for his delay moving his family to Alaska.
Seattle-area real estate listings showed Scott’s house listed for sale at $1.65 million at the time. It was then valued by the local assessor at $701,000.
Burns said the failure to sell the house seems to have played a role in Scott’s departure.
“I think it has been very challenging on Jeff’s family,” he said, blaming the “inability to sell their home and have the family here.”
Scott last year told Institutional Investor magazine that he’d taken a pay cut to come to Alaska, but it is not clear what that pay cut would have been from. A hedge fund that he and Giolitti had established after leaving Microsoft Corp.’s investment management division had shut down before his being hired by the permanent fund.
Burns said he expects Scott will get a pay raise at Wurts.
“I’m sure he’ll make more,” he said, but said there was no indication that inadequate pay was the reason for Scott’s departure.
“I honestly don’t think that was the proximate cause,” he said.
Burns said he wasn’t sure what the corporation would seek to pay its new CIO.
Scott will stay with the permanent fund through Aug. 1, Burns said. That’s likely not enough time to bring in a new top investment manger, but Burns said he would likely serve as acting CIO in the interim.
• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.
Comments (31)
Add commentBetter check their pockets
Better check their pockets, and start an investigation into their activities before they make off with the loot.
As a real Alaskan I would like to tell them both that they are POS and get the heck out of Alaska before you stink it up more.
So how much of our money did
So how much of our money did they run through Wurts in order to both get offered jobs there?
Burns should go too
This must have been another one those follow the stock market all the way to the bottom rather than the ability to read the signs and conditions get out. Speaking of conditions, past time for Burns to go too.
The Permanent Fund's hand outs to the public makes one think the growth in the fund is from investments and does it best to ignore that massive contributions from 25% of the royalty oil.
Maybe the contribution by royalty oil should be set out first then earnings so public can get an honest picture.
with neighbors like those on
with neighbors like those on this board, I can't blame them for leaving. I wish them all the luck in the world with their new jobs.
Well said, akbrdguru
Now, @AKgasman: The Permanent Fund DIVIDEND, distributed by the Department of Revenue, is funded by a 5-year average of 1% of the EARNINGS (from investment, not oil royalties) of the Permanent Fund CORPORATION. Please try to be informed before you post.
"I wish I knew how to quit
"I wish I knew how to quit you."
Thank you to MikeToo and akbrdguru
The APFC is an extremely transparent organization. Everything that you could ever want to know about them and more (including their performance, how much they have received in oil revenues, and who all of their investment managers are – fyi Wurts isn’t on the list) is on their website www.apfc.org
If you are going to collect the money from the dividend, then it isn’t a bad idea to familiarize yourself with how it is managed. If you are going to bad mouth the people and policies in place for managing those funds then you should most definitely take a minute and review the information that is readily available. Otherwise, you just sound spiteful and ignorant, two things that I am sure no one on this positing board is.
I wish both of these gentlemen all of the best in their new positions and I would like to thank them for their fiduciary management of the Fund.
I am sick and tired of
I am sick and tired of listtening to the buy local crap when alaska will not hire local.
Rampant Ignorance on This Board...
...which isn't surprising, though!
@hanklive: Really?!?! The fund is so transparent that there is no way for them to make off with "the loot". And good job of calling these guys each a POS...yeah, the same guys that helped bring the Fund back from the depths of the bear market. Learn before you post, it can help you not look so foolish and ignorant.
@kpawsuh: Once again, the fund is very transparent. And Wurts has NEVER been a Fund manager. Once again, a little knowledge before posting your senseless insulting blather could help you not look foolish.
@AKGasman: Performance calculations take cash flows (both incoming and outgoing) into account. Oil royalties are cash flows into the account and are subtracted from the funds value before performance is calculated. Besides, oil royalties are barely a drop in the bucket compared to dividend income, interest income, and gains on sales from investments. So yes, the Fund's performance is solely based on investment activity (with a 22% fiscal YTD return as of April 30th), and the oil royalties have NOTHING to do with performance. As I've already said twice in this post, a little knowledge before posting could help you not look so foolish. And why should Burns go.....he's been there for about 7 years now.....so he's ridden the market from the top down to the bottom and back to the top again!
That's good...
"Otherwise, you just sound spiteful and ignorant, two things that I am sure no one on this positing board is."
Funny!
Hanklive...
...what did these two Fund gentlemen do wrong? Please enlighten us!
And what does the Permanent Fund Corporation and its investment employees have to do with the Corrupt B'tards? Two items that have NOTHING to do with each other, but for some reason, you have them linked together.
Still wondering why you have such a gripe against these two fellas.....or are you just a grumpy, "I don't like anyone", old man?
Both, grumpy and getting old.
Both, grumpy and getting old. The fake trying to sell the house and quiting so soon just rubs me wrong, they had no intention of staying.
it's obvious that hanklive
it's obvious that hanklive has the inside scoop on the personal lives of these gentlemen. come on hank, give us the fact. you seem to know so much. or are you just talking out of the same hole you expel solid waste from?
Not personal lives, just
Not personal lives, just legal and moral issues that effect Alaska.
The law is the law.
And neither of these two gentlemen are alleged to have broken any laws. So why even mention it? And there's nothing immoral about changing jobs: I'd say 2.5 years is about average in any State position. Get over yourself, Hank, and stop trying to taint others with your misplaced "morals".
I get it...
Honestly, I get where Hanklive is coming from. I am a life-long Alaskan as well and I love this State. More specifically, I love Juneau. If you want to make me bristle, utter the phrases, “I hate Juneau” and “there is nothing to do here”. It is frustrating at times to think that other people might not love Juneau or want to call it home.
That said, whether these gentlemen ever planned on moving to and embracing Juneau, or if they thought of their positions at the Fund as just another job and were biding their time until another/better opportunity came along, they both seem to have done their job well. I thank them for that.
Well, looks like index funds and etfs will have to do for now...
So maybe now the fund can just use passive investing and seek to meet the market returns in all the relevant categories (minus miniscule fees) through etfs, indexes, etc.
This might be a good time to look at that strategy with some of the top folks (and overhead) leaving for various reasons.
The goal would be 99.9% of market returns. It could even be announced each year. No back peddling or explaining. Simple truth--we seek to get the market return (minus the least possible minimal fees/overhead). That is it.
Shun the latest and greatest from Wall Street--the sales people, experts, and fancy names and investments.
Just buy the whole market across the board (stocks, bonds, reits, commodities, global etc) with standard institutional allocations. Re-balance as required. Then do little else.
Let the experts go back to Seattle or Wall Street. Use local folks at 10th Street with copies of texts from J. Bogle and J. Siegel by their desks.
Think long term, low fees, passive strategies to meet --not beat (a fool's errand)--the market return in every category.
We'd probably be better served than with an active approach or one that requires highly paid "experts" from outside.
----
I also just noted the incredible irony that an "expert" in risk and asset allocation would have such trouble in his personal finances that he cannot relocate (shouldn't he have seen the real estate bubble? Why the overpriced, illiquid, non-income producing real estate?) due to "buying a house listed for sale at $1.65 million at the time. It was then valued by the local assessor at $701,000."
Is this the type of wise optimal allocation we were paying 350K for?
I have no beef with these
I have no beef with these gents. I think they were paid a ridiculous amount. It does seem odd though that they both came from Microsoft at the same time, worked here and both left at the same time to offers at the same place. Just seems weird. My comment was more an off handed joke than an accusation. My gracious the folks on these comments section have burrs up their a$$! There was a time when you could actually have a good educational debate on the blog, and I learned as much info as I disseminated. Now they are just full of bitter people, with no sense of humor who crave putting someone else down and will fight to the death to defend their presumption that their opinion is gospel and anyone who disagrees is an idiot. Maybe the Empire shouldn't have kept the blog.
Big Tall and so small --
Big Tall and so small -- why you get your act together. My statement has nothing to do with the permanent fund dividend.
Second 25% of the oil royalties is a lot money and it should be made clear on the hand outs the Permanent Fund gives to the public rather than make the royalties the fund recieves are part of the funds earnings
It's hard to start off a
It's hard to start off a light debate or discussion when the topic starts from a 'news' story. They spin and add information to lead you into a picture that they see. Might be a bad and wrong picture. Actually, the only thing that matters is that it gets your attention. And with that being the only real concern it just starts us off wrong.
I understand why they have to sell stories to us but were going to read them anyway, they don't need to trick us with misleading headlines and very biased writing.
AKGasman
You should quit while you're way behind.
First, my post was not at all about the dividend, either (and yes, your post was about the dividend, because you mentioned earnings, which is what the dividend amount is based on). It was about the Corporation and how the performance of the Fund strips out (rightfully) the natural resource royalty payments.
Second, when compared to $41 billion, the royalties actually are not that much money. Depending on timing, the Fund gets $45 to $90 million in royalties each month, only about 1/10th of one percent of the fund, which is immediately invested.
Third, the royalties that the Fund receives ARE NOT PART OF THE FUND EARNINGS! The royalties are invested and don't become part of fund earnings until those investments are sold or dividends/interest is paid.
Seems like you're the one that needs to "get your act together." You keep mentioning that royalty money should not be included in the earnings in publications handed out by the Fund.....well, guess what, they were never in fund earnings to begin with!
@kpawsuh
You actually bring up an excellent point regarding the employment histories of these two men. Clearly they know (and probably like) each other, and the likely make a good working team. However, maybe it might be prudent for Mr. Burns to reconsider letting the CIO bring people with them, if they are only going to take them with them when they leave.
I don't know how deep the Investments bench is at the APFC, but I have to imagine losing two managers at once will leave a hole.
Doesn't pass the smell test
Why would someone list their house on the market at (more than) double its assessed value?
Wait! I know! It's because...You don't really want to sell it!
That means, you have a good excuse like "my house wouldn't sell" in the event you took a job in Juneau, but had one eye on the job ads at the same time, waiting on something better...
Oh well, that's not a crime. But it sure sounds like a lame excuse to leave, because you couldn't sell your house.
So, this doesn't pass the smell test. I wish someone would do some digging.
Leaving Juneau
Governors and Commissioners don't want to live in Juneau- these guys have a lot of company!!!!
@bigtall
Thanks for saving me all that typing. I appreciate it.
Daffy...
Come clean! Admit you are Scott and/or Giolitti. Either that or you are just an apologist. Look at what we invest in: Exxon. Sinopec (Darfur). The list goes on. We need an ethics board like Norway. These men had no ethics. If they did, they would have vetted our assets. Stop apologizing for them. Unless, of course, you are THEM!
So sad
I have had notice, that when Juneau has important issues when dealing with goverment or even dealing with a city statue, they hired non Alaskans, and in the end .. they get screwed , this is an issue that repeats itself over and over. Who is in charge here? You mean to tell us.. there is actually no one in ALASKA who can fill these position.. oh yeah.. my bad, we voted Sarah Palin who quit on us also..
It's interesting to see
It's interesting to see people cast stones at Mr. Scott for trying to get top dollar for his home. I know the Snoqualmie area pretty well, and I know there is a lot of new construction of high-end luxury homes in that area. Sounds like he got into his home when the market was at or near its peak. There are a number of homes in Snoqualmie that are listed in excess of $1million, so it doesn't sound like he's out of line.
Onward
The important thing to remember is where we go from here, not who is leaving, but who is coming. Complaining about a couple of executives making career moves gets us nowhere. Let's bid them farewell, thank them for their services and wish them good luck. The search for their replacements is the key here and hiring locally is a nice thought, but I would be disappointed if the search was not global. I want the very best person (or people) recruited, regardless of where they come from. I do not care if they live in Juneau or not, if they are selling their home or not, if they have an eye out for a better job or not. We need the very best we can find and need to get on with our mission. Once hired, we need them to do their jobs well. Why dwell on the past? Let's look to the future and hope for the best. Let's make some money and spread the wealth.
fund managers are grossly overpaid
I read the story with a lot of amazement on the pay structure they pay the managers. Why don't they go back to the days of Byron Mallot when the managers were paid a fair pay and the fund was managed a lot more intelligently. I really don't think we need to pay someone 350k to pretend that they are an Alaskan resident only to see them leave after two years. Basically, these people are glorified state workers that should not earn more than 150k. Burns should be the first to go followed by the CFO and many others who are overpaid. It is just ridiculous.