BAKU, Azerbaijan, June 3
By Leman Zeynalova – Trend:
The investment strategy of Azerbaijan’s State Oil Fund (SOFAZ) may be changed in the medium term taking into account the fundamental factors, macroeconomic situation, the latest global market tendencies, the Fund told Trend.
SOFAZ noted that changes in risk tolerance and target profitability indicators may also trigger revision of its investment strategy.
“In order to reach long-term goals, SOFAZ conducts its investment activity in accordance with the Strategic Asset Allocation. This widespread strategy primarily envisages portfolio diversification aimed at reducing the risks, namely investment portfolio volatility and increasing the profitability.
In many cases fundamental stock market indicators do not change significantly in the long term as a result of the unpredicted developments, which affect the macroeconomic situation in the short term. At the same time, short-term volatility in the global stock markets and the ongoing global processes are in the spotlight of SOFAZ. However, in accordance with the long-term strategy, decision-making in such cases is not speculative. In the medium term, the investment strategy of SOFAZ may be changed taking into account the fundamental factors, macroeconomic situation, the latest global market tendencies, changes in risk tolerance and target profitability indicators,” said the Fund.
According to the Investment Policy of SOFAZ, 65 percent of the portfolio should be comprised of assets in USD, 20 percent in euros, 5 percent in pound sterling, up to 10 percent in other currencies, the rating of which is higher than «А» (S&P, Fitch) / «А2» (Moody’s). Moreover, the portfolio’s structure should be as follows: at least 50 percent should be comprised of bonds, no more than 25 percent in stocks, up to 10 percent in real estate, and up to 15 percent in gold.
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