Azerbaijan, Baku, Feb. 17 / Trend I.Khalilova /
The activities of investment funds will become a new step in the architecture of the securities market in Azerbaijan, which will provide a lot of investment opportunities and open new horizons for capital management in the country, chairman of the board of the Baku Stock Exchange (BSE) Emin Aliyev believes.
"Mutual funds will literally agitate securities market, since after their arrival and active trade Azerbaijani investors will get a whole line of products, which are in terms of their attractiveness, and their choice of the branch will not go unnoticed," Mr Aliyev told Trend on Friday.
He noted great opportunity to invest in many funds, which composition will consist of both local and foreign securities, will open. A real alternative to the traditional deposit accumulation and investment will appear. Undoubtedly, this is a qualitatively new stage in the development of the Azerbaijani capital market, which will provide integrated products and services.
Law "On Investment Funds" was adopted in 2010, and adoption of the regulatory framework, which outlines the contours of the legal aspects of this totally new kind of activity, was completed in August 2011.
"Naturally, this document has been very positively received by all market participants and investors, and it is natural that potential investors and market participants will need some time to create the fund and participate in it," the BSE head said.
Investment funds may be established in Azerbaijan in the form of joint-stock investment funds and mutual funds. Depending on the contractual rights to purchase the unit law distinguishes between three types of mutual funds: open, interval and closed.
According to the rules of the requirements for the formation of capital investment funds (IF), management, structure and composition of the assets of the funds, the minimum requirement for authorized capital of stock and mutual IF is defined at the level of 500,000 manat.
The minimum authorized capital for the entity managing the assets, is determined at the level of 125,000 manat. If the asset manager has at his disposal amount exceeding one million manat, he shall for every 200,000 manat of this amount to increase its total capital by 0.625 per cent of the exceeding amount. Upon reaching an increasing part of the total capital at two million manat, increase in the total capital is not required.
Expenditure on management of investment funds may not exceed five percent of annual expenditures.
Investment funds in terms of the composition of assets are divided into the following groups: IF of debt instruments, equity IF, mixed IF, IF of the real estate, index IF.
The composition of assets of IFs of debt instruments may include cash, bank deposits, government securities, municipal securities, corporate bonds.
The composition of assets of joint-stock IFs may include cash, bank deposits, stocks, derivatives of the shares, securities, shares in the open and interval mutual funds.
The composition of the mixed IFs assets may include cash, bank deposits, government securities, derivative securities, municipal securities, corporate bonds, stocks, shares in the open and interval mutual IFs.
The composition of assets of real estate IFs may include real estate, bank deposits, government securities, municipal securities, real estate, derivative securities on real estate, shares in investment funds.
The composition of the index IF assets may include cash, bank deposits, securities, included in the calculation of the base index.
The official exchange rate is 0.7863 AZN to $1 on Feb. 17.