SOFAZ develops new investment strategy

Oil&Gas Materials 27 January 2011 21:12 (UTC +04:00)

Azerbaijan, Baku, Jan. 27 / Trend E.Ismayilov /

The State Oil Fund of Azerbaijan Republic (SOFAZ) will submit to the Presidental Administration a new investment strategy by late 2011, SOFAZ Executive Director Shahmar Movsumov said at a press conference on the 2010 results.

He said the new strategy will focus on the portfolio diversification and the use of new high-risk instruments.

"As the fund's assets grew, it is necessary to use new tools, in particular the real estate," Movsumov said.

Based on the program on the main directions of SOFAZ's funds for 2011, the total investment portfolio of the State Oil Fund is projected at 19.4 billion manat.

Not more than $600 million of SOFAZ's resources may be invested in development projects in the extractive industry in the Caspian Sea or in the securities of the main founders, who have long-term investment rating.

Oil Fund may transfer about 60 percent of its investment portfolio to the management of foreign managers, but one manager can not manage over 15 percent of the total value of the portfolio. Benchmark to determine the profitability of Fund's assets in the investment fund (except the costs of portfolio management) is the rate of three-month LIBOR, published by the Association of the UK Banks.

The head of SOFAR did not rule out the possibility of attracting new foreign managers to manage the Fund's reserves after introducing the new strategy.

"This year, changing managers or attracting new managers is not planned. Despite that in the crisis years, results of operations of foreign managers were practically zero, last year the situation has improved and positive results have been obtained," said Movsumov.

Last year, the Oil Fund received income 155.9 million manat from fund management.

The fund managers are the Treasury Office of the World Bank, the banks Clarident (unit Credit Suisse) and Deutschebank Asset Management.
The assets of SOFAZ as of Jan.1, 2011 has grown by 52.8 % compared to the beginning of 2010 ($14/900.4mln.) and stood at $22. 766.8mln.

The official exchange rate is 0.7974 manat to $1 Jan. 27.