BISMARCK-North Dakota's State Investment Board voted unanimously Friday, May 25, to maintain its asset allocation of the Legacy Fund, which eclipsed $1 billion in net earnings on March 31.
Callan investment consultants presented their report from a study that calculated various asset allocation and spending projections for the fund out to 2038, including oil prices, oil production and spending policy.
After hearing the same report Thursday, the Legacy and Budget Stabilization Fund Advisory Board voted to recommend the investment board maintain the Legacy Fund's asset allocation.
State Treasurer Kelly Schmidt said in an interview she was pleased with Callan's report and recommendation to stay the course.
"Glad to see we're not going to add any additional risk to the mix of investing," she said.
The Legacy Fund's current asset allocation includes 50 percent equity, 35 percent fixed income and 15 percent real assets, developed from an initial asset allocation study in 2013.
"We just want Steady Eddy. That's the best way to invest," Schmidt said.
Including earnings, the Legacy Fund sits at about $5.4 billion.
The voter-approved Legacy Fund is derived from 30 percent of the state's oil and gas tax revenue. Its principal, now about $4.3 billion, cannot be touched without a two-thirds majority vote from both the state House and Senate, with only 15 percent of principal up for grabs in a biennium. Legislators tapped $200 million in earnings last session to help balance the state budget for the 2017-19 biennium.
"I think to me, the takeaway from the presentation and the discussion we've had in the past has always been we live in a little bit of two worlds," investment board vice chairman Rob Lech told the board. "We have to be prepared to address both the intergenerational and the short term, so the takeaway for me is we have to continue to live in this middle ground that prepares us for both outcomes."