Azerbaijan, Baku, March 17 / Trend E. Ismayilov /
The Azerbaijani State Oil Fund (SOFAZ) will bring its own gold reserves up to 30 tons by late 2013, SOFAZ head Shahmar Movsumov said in an interview with The Business Year: Azerbaijan 2013.
"According to SOFAZ current investment policy, up to five percent of our investment portfolio may fall to gold," he said. "We started making our investments in this kind of assets in February 2012 and acquired about 15 tons by the end of last year."
He said that as a kind of assets, gold has several unique characteristics that make it attractive to investors. Gold can act as an effective tool of hedging inflation and currency risks in the long term prospect. Moreover, gold ensures protection against high volatility in the financial markets during economic downturns.
SOFAZ buys physical gold on the London Metal Exchange and temporarily stores it in JP Morgan's London vault.
SOFAZ has already begun bringing gold to Azerbaijan. The first batch of gold was imported into the country on January 11, the second batch - on February 1 and the third batch - on March 1.
Referring to the plans for this year, Movsumov stressed that 2012 was marked by SOFAZ's entering the state securities market, real estate and gold. SOFAZ extended the exposure of currency portfolio, which includes the Australian dollar, the Russian ruble and Turkish lira in 2012. SOFAZ will continue working in this direction, as well as to further diversify the investment portfolio in 2013.
"We plan to increase our exposure for public and private shares," he said. "We will also strengthen our position in the real estate. Currently, we are examining new regions attractive for making investments in property."
According to SOFAZ's investment strategy, up to 5 % of SOFAZ investment portfolio may be invested in assets, up to 5 % - in real estate and up to 5 % - in gold for the first time since 2012.
SOFAZ was established in 1999 when its assets amounted to $271 million. As of Jan. 1, 2013, SOFAZ's assets hit $34.129 billion.
The main purposes of the fund are the accumulation of funds and placement of the fund's assets abroad to minimise the negative impact on the economy preventing a 'Dutch syndrome' to ensure savings for future generations and to maintain the current socio-economic standard in the country.