Wrangell profits from strong stock market

Wrangell, just like most other investors, profited from stock market gains of the past year, adding about $1.5 million to the value of the municipal permanent fund over the past 15 months as the Dow Jones Industrial Average reached record highs.

The city’s savings account was at $10.2 million as of March 31, up from $8.7 million on Jan. 31, 2020.

About 55% of the permanent fund is invested in stocks and 45% in bonds. Though stock markets crashed at the start of the pandemic early last year, they have since recovered far past their value of a year ago.

Alaska Permanent Capital Management, which has handled investments for Wrangell since Jan. 31, 2020, presented its first-quarter 2021 financial report to the borough assembly on April 27.

The company also manages the city’s operating funds, which are invested entirely in low-risk bonds and other assets, so the money is available as needed for day-to-day spending on budgeted services. The operating funds account grew from $5 million to about $5.03 million between Feb. 26, 2020, to March 31, 2021.

The operating funds account is invested entirely in U.S. Treasury notes, state and local bonds, such as Alaska North Slope Borough and state of Washington bonds, and cash to minimize risk.

The permanent fund represents Wrangell’s long-term investments, and is meant to act in a similar manner to the state’s permanent fund, generating earnings that can help with the budget, explained Borough Manager Lisa Von Bargen.

“A permanent fund is set up to try to provide what I would call an endowment for the city in the future,” she said. “We take a small percentage of the earnings every year for operations from the permanent fund.” The city is budgeted to withdraw $280,000 from the permanent fund for city operations this year, an amount that is in line with previous years, Von Bargen said.

The city can only withdraw a limited amount from the savings account, she said. A vote of the people would be required to spend any principal of the fund.

Anchorage-based Alaska Permanent Capital Management took over management of Wrangell’s investment accounts in early 2020. Before that, UBS, a global investment firm with an office in Anchorage, handled the accounts, Von Bargen said.

Alaska Permanent Capital Management had $3.24 billion in assets under its management as of Dec. 31, 2020.