Baku, Azerbaijan, Oct.15
By Aygun Badalova, Elena Kosolapova - Trend:
Lower oil prices along with decrease in revenues of the State Oil Fund of Azerbaijan (SOFAZ) have some positive impact on the fund's investment portfolio, Deputy CEO of SOFAZ Israfil Mammadov said, participating in Trend's This Week in Focus program.
Mammadov said that obviously, the main source of the revenues for the oil fund proceeds from oil and gas projects in Azerbaijan.
"We invest in many oil importing countries in emerging economies which benefit from oil prices," he said, adding that in this case, the decrease in oil prices has a positive impact on SOFAZ's portfolio.
The deputy CEO of SOFAZ believes that there should be a balance in oil prices.
Extremely high oil prices have negative effect on global economy and SOFAZ, as an institution that invests globally is interested in global growth and stability of the world economy, Mammadov added.
He noted that the fund can take the short-term volatility experienced in the world markets nowadays.
"Our view is long term," he said, adding that as a long-term investor, SOFAZ can take all those volatility in currency and asset prices.
Furthermore, he said that SOFAZ made major changes in its investor portfolio in 2012 after which it became a multi-asset class investor. Mammadov noted that the investment strategy of SOFAZ constantly evolves and depends on the risk appetite of its stakeholders.
The fund builds an investment-diversified portfolio and its current currency basket is comprised of 50 percent allocation to the US dollar and 50 percent allocation to other currencies, according to Mammadov.
"We will be both looking for further diversification not only in assets but also in some other currencies," he noted.
SOFAZ's objective is to maximize its long-term risk-adjusted investment return, Mammadov added.
"Our aim is to transform the oil resources into financial assets, so that future generations can benefit from this," he said.
To learn more about the topic, check out the full episode below.