Russia’s new SWF seeks bond and equity exposure
Russia is planning to launch a new state-owned investment agency next year to invest the country’s oil wealth in global financial markets, finance minister Anton Siluanov tells Euromoney in an exclusive interview.
The new Federal Financial Agency (FFA) will invest excess government revenue generated from high oil prices in a more diverse range of domestic and international securities, including bonds and equities for the first time, under an investment strategy similar in part to that employed by the Norwegian sovereign wealth fund (SWF).
|Anton Siluanov, Russian finance minister|
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 FFA’s 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 FFA’s 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?”