BAKU, Azerbaijan, May 8. Since investing in
stock indices, the State Oil Fund of Azerbaijan (SOFAZ) has earned
more than $5 billion, the Azerbaijani State Oil Fund (SOFAZ) told
Trend.
Since 2012, SOFAZ, in order to diversify its investment
portfolio, has started investing in shares through stock indices.
Since the period of implementation of this strategy, as of March
31, 2024, the profit has amounted to $5.3 billion, or 226 percent.
It should be emphasized that SOFAZ places great importance on
diversifying the investment portfolio across all types of assets,
including equities.
The fund noted that most institutional investors, including
SOFAZ, such as sovereign wealth funds and pension funds, utilize a
passive management strategy in making their investments in listed
equities.
Additionally, it should be noted that SOFAZ stock index strategy
implies not active selection of shares of certain companies but
passive investment in all shares included in the global index,
which consists of more than 1,400 companies, in proportion to their
market capitalization.
“While investing in shares on the stock exchange, the fund
replicates the MSCI World Index [Morgan Stanley Capital
International World Index], which consists of the largest companies
of the developed world, taking into account the weight of the
companies included in this index. The MSCI World index, which is
the predominant part of the SOFAZ share portfolio, consists of
shares of 1,465 companies (the total market capitalization of which
is about $70 trillion), covering 11 sectors of the economy in 23
developed countries of the world,” the fund noted.
MSCI World Index tracking indicators (as of March 31,
2024)
Besides, it is worth noting that in addition to tracking the
MSCI World index, part of the SOFAZ equity portfolio worth $1.6
billion is invested in the euro-denominated MSCI Europe ex UK
index.
“In connection with the recent news in the media, we would like
to state that after the inclusion of Tesla and Intel shares in the
SOFAZ portfolio (Intel shares since 2012, since the creation of the
stock portfolio, and Tesla shares since 2013, since the inclusion
in the MSCI World index), the weight of these shares in the SOFAZ
portfolio corresponded to the weight of the same shares in the MSCI
index. Generally, a stock index is an aggregate of shares of
publicly traded companies from different regions, countries,
economic sectors, and other factors. Examples of such indices are
S&P 500 (500 largest companies of the US stock market), STOXX
Europe 600 (600 small, medium, and large companies of developed
European countries), and NASDAQ 100 Technology Sector (100 largest
technology companies),” the Fund noted.
MSCI World index distribution by country and industry
(as of March 31, 2024)
“It should be noted that tracking an index under passive
management involves building a portfolio by investing in stocks
included in the index according to their weighting in the index.
Additionally, we would like to state that SOFAZ does not invest in
Exchange-traded funds (ETFs) or Mutual Funds but directly buys
shares of companies included in the index,” SOFAZ stated.
Key indicators and return on SOFAZ’s investments in
listed equities in developed countries (as of March 31,
2024)
Invested funds |
$7,1 billion |
Profit |
$5,3 billion |
Current value |
$12,4 billion |
Yield from the moment of portfolio creation |
226 percent |
“We would like to point out once again that SOFAZ implements a
passive management strategy rather than a speculative and risky
strategy based on the selection of certain stocks. While providing
a higher level of diversification, this strategy, like many
institutional investors, is more conservative,” the fund
concluded.