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SOFAZ has no plans to up its gold reserves

18 July 2016 11:04 (UTC+04:00)
SOFAZ has no plans to up its gold reserves

By Nigar Abbasova

Azerbaijan's state oil fund SOFAZ has no plans to increase the volume of its gold reserves in 2016, regardless a rise in prices of the precious metal, source in the Fund told Trend.

“Storage of gold reserves has a long-term and strategic character. Investments in gold are not considered only as an element of diversification of investment portfolio. SOFAZ buys gold not for the sake of purchase or other speculative purposes. The reserves are considered to be a part of strategic gold reserves of Azerbaijan which are aimed at covering financial and political risks,” the source said.

Currently, portfolio of gold reserves of the Fund comprises 30,175 kilogram of gold. The figure amounts to 3.1 percent of the total assets. The price for an ounce of gold in the world market increased by 27 percent and totaled $1339.55 in the first half of 2016.

Under SOFAZ’s funds management rules, the portion of gold reserves in total assets shouldn’t exceed the five percent limit of the fund’s investment portfolio.

As much as 4.6 percent of SOFAZ portfolio falls to a share of real estate while investments in projects account for 2.5 percent. The largest portion of the investment portfolio which amounts to some 80.6 percent is placed in bonds and instruments of the currency market.

Earlier it was reported that the Fund has no plan to replace gold reserves with other assets.

Along with its significance for the diversification of investment portfolio, investing in gold has a special importance as a means of insurance against economic downturn, exchange rate risks and inflation.

The assets of the Fund increased by 2 percent and amounted to $34.25 billion in April 2016 as compared to the rate of 33.57 billion at the beginning of the year.

Previously, the fund’s chief investment advisor Ziya Kangarli said that SOFAZ plans to increase the profitability of asset management in the years to come.

SOFAZ was established in 1999 with assets of $271 million. The funds of the entity may be used for the construction and reconstruction of strategically important infrastructural objects as well as for tackling national problems. The Fund started purchase of gold from February 2012.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

Follow us on Twitter @AzerNewsAz

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