Legacy Fund Update Through November, 2017

Legacy Fund Update: November 28, 2017 -- KFYRTV

Link here. Data points:

• the Legacy Fund now sits near $5 billion (net deposits plus generated income from those deposits)
• June 30, 2017 (this year) -- the state is now allowed to start spending some of that money
• at the beginning of the 2017- 2019 biennium: $4.6 billion 
• at the start of the 2Q17, the fund grew by about $300 million
• based on that limited data, one can calculate the earnings the state is making on the fund (not the deposits, but the earnings) -- I would post my "back-of-the-envelope" numbers but when I did that my numbers seemed "hard-to-believe" so either deposits are increasing significantly (probably) or I did the math wrong -- but it's an interesting exercise for CPAs

But look at this: according to the linked KFYR article, after one quarter, (there are eight quarters in a biennium, I would suppose), the Legacy Fund has reached about one-quarter of its goal for the current biennium.

Maybe its my inappropriate exuberance about the Bakken, but it seems that should have been the lede.

From the story:

"The snapshot at this point in time, we've generated about $52 million, over three months. We've got 24 months to earn $200 million," said Dave Hunter, executive director of the Retirement and Investment Office.

Since deposits average about $35 million/month, that $52 million figure has to be fund growth not including deposits. Now one can do the math again. The number looks a lot more reasonable.

Not great, but a lot more reasonable.

The reason for the growth according to the executive director:

"The snapshot at this point in time, we've generated about $52 million, over three months. We've got 24 months to earn $200 million," said Dave Hunter, executive director of the Retirement and Investment Office. 

In all these years of following this story, I've never see the state provide the annual rate of return on the earnings. I suppose the state has posted those numbers; if so, I simply missed the stories.

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Data

Source here.

The Legacy Fund is tracked here.

Through November, 2017, total deposits were $4,115,907,213. These are deposits only; not total assets.

Most recent deposit, November 22, 2017: $37,478,583.

Note: the most recent deposit exceeds the average deposit in each of the last two years (2016 and 2017). The Saudi Surge was from November, 2014 (announced) through November, 2016 (announced).

Historical Legacy Fund deposits:

A data point I'm most interested in is how well the manager of the Legacy Fund invests the deposits. According to The Dickinson Press, in September, 2016, the state anticipated a rate of return of about 1.5% for each of the two years in the 2017-2019 biennium. Considering how "hot" the equity market has been since November, 2016, if that's the return North Dakota citizens are getting on the Legacy Fund, someone should be asking some tough questions. The Dickinson Press said that for the 2017 - 2019 biennium the state expected the Legacy Fund would generate $120 million on more than $4 billion in deposits.