Azernews.Az

By Bloomberg

Russia’s AO European Pension Fund is seeking to invest in assets with more stable yields, including those tied to infrastructure projects, to offset surging swings in local market prices.

Bonds that protect against inflation and securities with ties to agriculture investments would be appealing for the retirement fund, Chairman Evgeny Yakushev said in an interview in Moscow last week. Volatility in Russian stocks and bonds has soared in the past year due to falling oil prices and sanctions over the conflict in Ukraine.

“At the moment, it’s wrong to invest in the market, it’s better to wait it out in assets that won’t fall much due to the fluctuations,” Yakushev said. Investments in “retail, supported by real demand for food from the population” would offer a stable cash flow, he said.

Retirement funds in the world’s biggest energy exporter are looking for places to park their cash after the government in May started releasing part of the $10 billion in employer contributions that was frozen in an industry revamp in 2013. Bonds connected with agricultural projects, including vegetable depots, could be a good investment for retirement funds once established, Sergey Shvetsov, the first deputy governor of Bank of Russia, said last month.

The funds also need to diversify investments as policy makers said they intend to reduce the amount of assets that retirement endowments can hold in bank deposits to 40 percent from 80 percent by the end of the year.

European Pension Fund invested in bank deposits last year as interest rates soared to “double-digit” levels, according to Yakushev. The Bank of Russia raised benchmark borrowing costs five times last year to 17 percent to stem the ruble’s slide, before reversing part of the increases in 2015.

Russian stocks are the second-most volatile among emerging markets after Hong Kong on a 120-day basis, data compiled by Bloomberg show.

The European Pension Fund is member of the B&N Group of retirement funds, which has 136 billion rubles ($2.4 billion) of saving contributions under management. The figure takes into account the Raiffeisen Bank International AG pension fund, which B&N Group is in the process of acquiring.