State Oil Fund of Azerbaijan completes development of new investment strategy
Azerbaijan, Baku, April 19/Trend, A. Akhundov
The State Oil Fund of Azerbaijan (SOFAR) submitted its new investment strategy for consideration to the Presidential Administration, SOFAR Executive Director Shahmar Movsumov told a press conference on Tuesday. The press conference was devoted to the results of SOFAR operation in the first quarter.
He said the new strategy will aim at diversification of SOFAR portfolio and use of new highly risky instruments.
As SOFAR assets are growing, it becomes necessary to use new instruments, Movsumov reported earlier. One of such instruments is the real estates, he said.
According to the adopted 2011 Program of main directions of use of SOFAR assets, the combined portfolio of SOFAR investments is forecasted at 19.4 billion manat. The liquidity of SOFAR assets should be no less than $100 million for the reasons of timely, full performance of transfers in conformity with the SOFAR budgetary expenditures.
Not more than $600 million of SOFAR currency assets may be invested in Caspian extractive industry development or in securities of major founders having long-term investment rating.
The Oil Fund may pass up to 60 percent of its portfolio of investments to a foreign management; however, a single foreign manager may not receive more than 15 percent of the portfolio's combined value under management. The benchmark for calculation of return of SOFAR assets in an investment fund (except for portfolio management-related costs) is the three-month London InterBank Offered Rate (LIBOR).
In connection with the launch of the new strategy, SOFAR Chief does not rule out the possibility of involvement of new foreign managers in work on SOFAR assets management.
The SOFAR does not expect managers to change or new managers to be involved in the work this year.
Though the results of operation of SOFAR foreign managers were actually equal to zero in the crisis years, the situation became better last year as positive results were achieved.
The management of the SOFAR assets yielded 62 million manat in the first quarter.
SOFAR Managers are the World Bank's Treasury Department, Clarident (a division of Credit Suisse), and Deutschebank Asset Management.
SOFAR's assets increased by 13.3 percent against $22,766.8 million in the beginning of the year up to $25,796.9 million on April 1, 2011.
The State Oil Fund was established in 1999 and had assets of $271 million at the time.
The official exchange rate on April 19 is 0.7918 AZN/USD.