BISMARCK, ND – The Retirement and Investment Office (RIO) says more than $395 million in Legacy Fund assets are committed to or invested in North Dakota as of Dec. 31, 2023, highlighting the substantial progress the state’s in-state investment program has made in less than three years.
"The Legacy Fund’s in-state investment program has made meaningful and measurable progress for the citizens of North Dakota," said RIO Executive Director Jan Murtha. "Through strategic partnerships and diligent investment practices, we are steadily progressing towards our target allocations, reinforcing North Dakota’s support for local businesses and communities."
The Legacy Fund’s asset allocation, which is set by state statute, targets $1.3 billion to in-state investments – $700 million to fixed income such as infrastructure and $600 million to equity investments to support new and growing businesses. As of year-end, the program is 30% of the way to achieving its investment goal. The State Investment Board (SIB) has statutory responsibility for North Dakota’s investment program while RIO manages the program’s assets.
“Under state statute, the goal of the Legacy Fund’s in-state investment program is to provide a return on investments while working to ensure that North Dakota’s entrepreneurs are provided opportunities to succeed,” said Murtha. “The natural outcome of the program is economic growth.”
Year-end performance reports posted by RIO show Legacy Fund fixed income investments of more than $258 million in MATCH program loans and $49 million in the Infrastructure Revolving Loan Fund, both programs managed by Bank of North Dakota. The bank’s MATCH program offers loans with interest rates lower than prime to attract and retain companies with an investment grade rating and its Infrastructure Fund provides low interest loans to political subdivisions.
In addition, an update provided by 50 South Capital, the manager of the North Dakota Growth Fund’s (NDGF) private equity investments, shows $89 million has been committed to five funds and four direct co-investments. [RIO’s performance reports only reflect the capital called by 50 South Capital.] The NDGF was created to advance innovation and private market investments in the state by seeking investments that provide strong risk-adjusted returns and support North Dakota’s growing entrepreneurial ecosystem.
“North Dakota is aggressively investing the Legacy Fund in North Dakota,” said state Sen. Jerry Klein, who chairs the Legacy and Budget Stabilization Fund Advisory Board. “When our program is compared to our peers’ programs, our commitment is substantial.” Alaska and Montana, states with economies and populations similar in scale to North Dakota, have targeted up to $200 million and approximately $284 million, respectively, to their in-state investment programs.
RVK, a Legacy Fund advisory board consultant, projected during a December 2023 presentation that it would take until 2030 for the in-state investment program to reach its $600 million private equity goal – the primary factor being that North Dakota’s goal is large in relation to the state’s GDP. The advisory board met on Wednesday, March 20, to review RVK’s asset allocation study and discuss the program’s development.
The Legacy Fund was established in 2010 through a constitutional amendment that directed a portion of the state's oil and gas tax revenues into a permanent trust fund. It is currently valued at $9.8 billion. State legislation established the fund’s in-state investment program in 2021 and directed the SIB, through RIO, to administer the program as directed by the Legacy Fund advisory board.
At the end of each biennium, the North Dakota Constitution requires RIO to transfer a portion of Legacy Fund earnings to the state's general fund. More than $486 million was transferred on June 30, 2023. The dollars were used to provide North Dakotans with tax relief, pay debt on previously issued bonds, and support the highway tax distribution fund.