ASSET MANAGEMENT

The State Oil Fund's assets are managed in accordance with the "Rules for accumulation, investment and management of  assets of the State Oil Fund of the Republic of Azerbaijan" (Investment Guideline) approved by Presidential Decree of June 19, 2001 and amended by Presidential Decree No. 607 dated December 12, 2001 and No. 202 dated March 1, 2005. 

According to these Rules the purpose of management of the Oil Fund's foreign currency assets is to hold foreign currency assets of the Oil Fund securely and to generate revenues by effective management.

Outside the Republic of Azerbaijan, the current accounts of the Oil Fund should be opened with banks rated by reputable international rating agencies such as Standard & Poor's, Moody's and Fitch with a long-term credit rating not lower than: "AA-" - as defined by Standard & Poor's, Fitch or "Aa3" - as defined by Moody's.

The Fund's counterparties at international financial markets might be the institutions with long term credit ratings not less than BBB (by Standard and Poor's), BBB(by  Fitch) or  Baa(by Moody's).

The maximum weight of one financial institution or one investment in the investment portfolio of the Fund is set at 15% of total amount of the investment portfolio (exceptions are central banks, custodian banks and external managers).

Foreign currency composition of investment portfolio

50% of the total amount of the investment portfolio of the Fund is to be invested in assets denominated in US Dollars, 40% in assets denominated in Euro, 5% in assets denominated in GBP, whereas 5% of the total amount of the investment portfolio of the Fund is to be invested in assets denominated either in currencies of countries with the long-term country ratings (sovereign debt) not less than the credit ratings A (Standard & Poor's, Fitch) or A2 (Moody's); in US Dollars or in US Dollars, Euro and GBP based on their respective weight.

External managers:

According to Investment Policy up to 60% of the Fund's investment portfolio can be managed by external managers. The assets given to an external manager cannot exceed 15% of total amount of the investment portfolio.

Derivatives

Oil Fund's investment portfolio should not be invested in currency arbitrage, swaps, forwards and futures (except for the purpose of hedging or optimizing the currency composition of the investment portfolio and structure of the Oil Fund's assets), precious metals and stones and real estate.

All information about Fund's asset management is being disclosed at SOFAZ's quarterly Press Conferences.