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Swiss National Bank’s Twelve Percent Equity Allocation

Twelve percent of the Swiss National Bank’s (SNB) foreign reserves are allocated to global equities. Of that allocated percentage, the majority is invested directly by the Swiss central bank. Some SNB board members feel the equity allocation is too high with regards to stated diversification goals. In fact, some acknowledge that a zero to five percent allocation in equities would be sufficient enough for a central bank’s reserve diversification to reduce the risk profile. Central banks and monetary authorities are far more conservative than sovereign wealth funds when it comes to asset allocation.

The Swiss National Bank currently manages foreign currency reserves of 424.4 billion CHF.

Among Occidental monetary authorities, the SNB was seen as a forerunner when in 2004, it allowed a portion of foreign reserves to be invested in public stocks. The SNB does not buy stocks in Swiss companies. Before that change in allocation policy, the majority of SNB’s reserves were invested in fixed income instruments and gold. The SNB assesses new asset classes and other currencies in order to reduce risk concentration in developed markets.

SNB Foreign Reserve Allocation as of September 28, 2012

  • Government Bonds 83%
  • Other Bonds – 5%
  • Equities – 12%

UNICEF and NBIM to Host Meetings on Children’s Human Rights

The United Nations Children’s Fund (UNICEF), a United Nations programme headquartered in New York City, has partnered with Norges Bank Investment Management (NBIM) to facilitate a series of meetings between companies to discuss issues surrounding children’s human rights.

According to the news release, “the network will facilitate dialogue between leading brands and retailers in the garment and footwear industry to strengthen children’s rights.”

NBIM is invested in many listed companies and have invited them to join a network to tackle these issues. Over the next two years, the organizations plan to hold three workshops as well as quarterly meetings surrounding these issues.

“Over time, we hope and expect that the network will contribute to improved market practices among companies and greater respect for children’s rights,” says Carine Smith Ihenacho, Global Head of Ownership Strategies, in a NBIM press release.

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SouthGobi’s CEO Arrested, CIC Struggles with Investment

The China Investment Corporation (CIC) has long struggled with its investments in coal assets, specifically in globally-listed coal miner SouthGobi Resources Ltd, which operates its flagship coal mine in Mongolia. In November 2009, CIC and SouthGobi Resources inked a convertible debenture deal. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Qatar Central Bank Deals with MSCI

MSCI, a stock index company whose benchmarks influence investor behavior, has tremendous indirect power impacting the stock markets of smaller economies. In 1988, MSCI released its emerging markets index, a now-widely-used benchmark for many institutional investors wanting access to growth markets. China and South Korea make up the majority of the benchmark, but smaller economies such as Poland, Chile and even Qatar make up other pieces of it.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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