State Oil Fund of Azerbaijan

State Oil Fund of Azerbaijan

Azerbaijan US$ 32.7 Billion
Established: 1999
Transparency Rating: 10
View Sovereign Fund Transaction Data
View Asset Allocation		 Origin: Oil
Firm Investment Style: Mostly Portfolio
Entity Structure: Fund
Population Est.: 9.4 million – 2013
Wealth Per Capita Est.: $3,495
Summary
The State Oil Fund of the Republic of Azerbaijan (SOFAZ) is a sovereign wealth fund located in Azerbaijan.

Background
Located in the port city of Baku, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) was established in December 29, 1999 in accordance with the Decree of Heydar Aliyev, the former President of the Republic of Azerbaijan. The main responsibility of SOFAZ is to manage foreign currency and assets generated from oil and gas exploration and development. Statutory regulations were approved for the fund by President Heydar Aliyev exactly one year after establishment. The fund’s purpose is for the benefit of future generations, while improving the current economic well-being of its populace.

Strategy & Objectives
SOFAZ may be categorized as a savings fund for future generations, which diversify portfolio assets from a nonrenewable resource and manage the effects of Dutch disease. The Fund primarily invests foreign currency and assets generated from oil and gas exploration and development in investment-grade securities such as government agency bonds, corporate bonds, and mortgage-backed securities. The fund also invests directly in gold bars that conform to the requirements of the London Bullion Market Association.

SOFAZ can also invest in stocks that are included in major international equity indices and institutional real estate.

According to its 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.

Governance
Members of the Supervisory Board are appointed by the President of the Republic of Azerbaijan. Board members represent as state bodies and civil society. There are seven members on the supervisory board, including two members of the Milli Majilis (parliament), who are nominated by the Speaker of Parliament. The management of the State Oil Fund of the Republic of Azerbaijan is vested with the Executive Director. Movsumov is an active legal representative of the Fund, and has the responsibilities of appointing employees, management of Fund assets in compliance with the regulations approved by the President of Azerbaijan, and preparation of the annual budget for the Fund.

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