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Tuesday, September 11, 2012
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by Dominic O’Neill, Kanika Saigal
Under the plans, the finance ministry is to transfer the management of $150 billion-worth of investment funds in Russias Reserve Fund and the National Welfare Fund from the central bank to the FFA.
Siluanov believes the FFA will start operating fully early next year.
This agency will be staffed with top-notch managers, experienced in financial markets, says Siluanov. It will be for them to determine the most effective way to invest the funds held by our Reserve and Welfare Funds in the most effective fashion, be it domestically or on the international market.
A proportion of the FFAs investable funds will be invested in assets such as equities and corporate bonds for the first time, increasing diversification and marking an evolution in strategy beyond a traditional focus on foreign sovereign bonds, particularly US Treasury bills.
The range of instruments the fund can be invested in will be substantially enlarged in scope to get higher revenues from these investments, while at the same time retaining sufficient stability of those investments, says Siluanov.
Although the exact amount is yet to be finalized, Siluanov believes between 15% and 20% of the FFAs funds could be invested in shares. He adds the agency will not be restricted to buying shares in state-owned banks Sberbank or VTB.
The managers for the FFA will be guided by considerations of profitability and risk, says Siluanov. It will be up to the managers of the agency to make investment decisions. If they come to the conclusion that such an investment will be profitable, why not?
See the September issue of Euromoney for more news on Russia's sovereign wealth fund.
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