North Dakota’s Legacy Fund Demonstrates Responsible, Strategic Investment for Long-Term Growth

BISMARCK, N.D. - North Dakota State Investment Board (SIB) members say they fully support transparency in the state's Legacy Fund but caution that any proposed legislation aimed at the Legacy Fund should avoid harming its stability and growth or jeopardizing its in-state investment program.

"The State Investment Board is committed to ensuring the Legacy Fund's investments are responsibly managed to support North Dakota's future," said Lt. Gov. Tammy Miller, the board's chair. "With careful oversight by the Retirement and Investment Office, the fund prioritizes protecting the principal, strong returns and adherence to fiduciary responsibilities."

Established by voters in 2010 and managed as a sovereign wealth fund, the $11 billion Legacy Fund aims to provide long-term financial security for North Dakota by depositing 30% of the state's oil and gas tax revenues and investing those funds to generate returns for the state. The Legacy Fund is managed as a sovereign wealth fund to foster financial stability and allow North Dakotans to benefit from the state's natural resources for generations to come, regardless of market and industry fluctuations affecting the oil and gas sector.

"Following the prudent investor rule, diversification of our investments is key," said State Treasurer Thomas Beadle, an SIB member and Chair of the Board's Investment Committee. "By diversifying broadly - across markets and regions - we invest responsibly and protect the fund's resilience."

The Legacy Fund's investment practices align with those of other major sovereign wealth funds, including Alaska's Permanent Fund and Norway's Government Pension Fund Global. This approach includes a careful 2.77% allocation to China, the world's second-largest economy, to access a broader range of opportunities and strengthen risk-adjusted returns. (Norway invests about 3% of its fund in China.) By comparison, 8% of the Legacy Fund's assets are allocated to investment in North Dakota.

The SIB avoids investments restricted by the federal government, strictly adhering to guidance from the U.S. Department of the Treasury's Office of Foreign Asset Control.

"Transparency and prudent oversight are central to our investment management approach," said Retirement and Investment Office (RIO) Executive Director Jan Murtha. "Our team monitors the portfolio to ensure compliance with investment guidelines for all client funds."

While some investment information is held confidential under law to protect strategic and market-sensitive data, RIO is committed to sharing the Legacy Fund's information as fully as possible as allowed by state and federal law, adds Murtha.

Legacy Fund assets are allocated according to policies set by the Legacy and Budget Stabilization Fund Advisory Board, which consists of six state legislators as voting members and four citizen members as nonvoting members. The SIB follows these policies and state law when managing the assets. The SIB's Investment Committee provides oversight of the investments within the established parameters.

These policies have generated positive returns for North Dakota taxpayers, with a five-year annualized return of 6.6% that has outpaced the inflation rate by over 2% and exceeds its policy benchmark return of 5.8%.

The SIB and RIO always welcome the opportunity to educate the public on how the Legacy Fund is managed and invested. For more information about the Legacy Fund, visit RIO's website.