State Oil Fund of Azerbaijan begins to explore new assets
In line with the changes to the rules of keeping, placing and managing the currency assets of the State Oil Fund of Azerbaijan (SOFAR), it is planned to attract new foreign managers to manage new assets of the Fund, SOFAR Chief Shahmar Movsumov told reporters on Wednesday.
"It is necessary to involve new managers as the SOFAR starts exploring new assets. The existing managers of the Fund are involved in the management of the Fund's fixed earnings portfolio," Movsumov said.
Currently, SOFAR managers are the World Bank's Treasury Department, and banks Clarident (a division of Credit Suisse) and Deutschebank Asset Management.
The amendments to the rules specify demands for foreign managers to be involved in the management of the State Oil Fund's portfolio of investments. Particularly, managing SOFAR assets can be a foreign manager whose credit rating or credit rating of his/her key founder is not lower than the investment level (Standard & Poor's, Fitch, or Moody's), or he/she should have no less than 5-year positive experience in managing assets, or experience inmanaging assets worth no less than $1 billion.
The Oil Fund may pass up to 60 percent of its investment portfolio to foreign managers for managing purposes, but no one manager may manage more than 15 percent of the portfolio's combined value. The benchmark for determination of profitability of SOFAR assets in an investment fund (except for portfolio management-related expenditures) is the 3-month LIBOR publicized by the UK Association of Banks.
Movsumov said one of the new directions of investing SOFAR assets are the investments in gold reserves: monetary gold and bars. "The most important thing is that gold corresponds to generally accepted standards and hence, Azerbaijani gold will also be examined," Movsumov said.
The State Oil Fund was established in 1999 with its assets equivalent to $271 million at the time.
SOFAR assets increased by 41.6 percent from $22,766.8 million in the beginning of the year to $32,242.5 million on October 1.