FTSE Group (FTSE) announced that the Alaska Permanent Fund Corporation (APFC) has selected the FTSE RAFI US 1000 as the benchmark index for an approximately $1 billion allocation to US large and mid-cap investment. The FTSE RAFI US 1000 Index, part of the FTSE RAFI Index Series, is based on methodology developed by Research Affiliates, Inc. that weights index constituents by fundamental value rather than market capitalization. A constituent’s fundamental value is determined by four factors: dividends, cash flow, sales, and book value.
The FTSE RAFI Index Series is one example of the wide array of alternative and investment strategy indexes that FTSE offers. These indexes are both a compliment and alternative to traditional, market-cap weighted index benchmarks. Comprised of the largest 1000 US-listed companies as measured by fundamental value, the FTSE RAFI US 1000 has outperformed FTSE’s US benchmark index, the FTSE USA All Cap, by and 8 % over the past five years.
The Alaska Permanent Fund Corporation was created in 1976 to conserve a portion of the state’s revenue from mineral resources, namely oil. Today, the Permanent Fund has over $34.7 billion in assets, making it the 18th largest sovereign wealth fund globally. APFC has named Mellon Capital Management Corporation to manage the approximately $1 billion mandated allocation to the FTSE RAFI US 1000 as part of its indexing relationship with the investment firm. The mandate was funded from the AFPC’s S&P 500 and S&P 400 mandates, also managed by Mellon Capital.
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