Share of securities to decrease in Azerbaijani State Oil Fund’s investment portfolio

Azerbaijan, Baku, March 14 / Trend E. Ismayilov /

It is planned to include gold in the portfolio of the State Oil Fund of Azerbaijan (SOFAZ) within two years by separating on weekly purchases to minimize the risk of price volatility, SOFAZ told Trend on Wednesday. The total amount of purchased gold must not exceed 5 percent of the investment portfolio.

"The cost of investments in gold at the end of the two-year period will approximately equal to the average market gold price during this period thanks to this strategy," the fund said.

The investors disagree, when the matter rests in the investments made in gold. Many of them consider the investments made in gold as insurance against economic recession, currency risk, inflation and other factors, and are characterized by high price volatility. This seems even more attractive for portfolio diversification.

"SOFAZ plans to gradually include gold in its investment portfolio," SOFAZ said. "The investments in gold are made by a conservative method, that is, through the purchase of physical gold in the form of bars."

SOFAZ has started investing in gold bars of the banks that are market makers - members of the London Bullion Market Association. The Association consists of banks, manufacturers, transportation and refining companies, specializing in the gold and silver bullion market.

According to SOFAZ's investment strategy approved by Azerbaijani President Ilham Aliyev on December 29, 2011, up to five percent of SOFAZ's total investment portfolio may be invested in gold in 2012.

According to the information, SOFAZ's assets have been primarily invested in securities with high credit ratings for a sufficiently long period of time. As a result of passing to new financial instruments (real estate and gold), the share of securities in the investment portfolio will be reduced.

As of 2011, SOFAZ's total investment portfolio amounted to $29.629.89 billion, or 99.43 percent of SOFAZ's total volume of assets.

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