Russian SWF to Propose Strategy

By Brett Keller

Oxford Analytica’s “The World Next Week” has an article up entitled “Russia: 32 billion dollars in search of a manager.” Excerpts:

On Thursday, the [Russian Finance Ministry] (known as MinFin) plans to issue a series of proposals to the Kremlin on how Russia should manage its nascent sovereign wealth fund (SWF).  Capable (and liberally-inclined) Finance Minister Aleksei Kudrin has said that Russia needs to attract top-flight talent to manage its oil and gas wealth, and the guidelines issued by his ministry will be key to understanding how Russia will develop its investment strategy.  MinFin does not have the in-house expertise properly to manage the fund, nor does the Central Bank.  Russia’s willingness to take on external managers would be a crucial step towards improving the transparency and professionalism of the fund, and could reassure the West that it does not intend to use its reserve of hydrocarbon wealth as a means of exercising undue political influence.

Some background on Russia’s SWF:

Russia’s fund, which has been christened the National Wealth Fund (NWF), grew out of the larger Stabilisation Fund (abbreviated in Russian as Stabfond), the total value of which is approximately 162 billion dollars…. On January 31, then-President Vladimir Putin signed a decree splitting the fund into the NWF and the Reserve Fund, the latter of which is subject to strict guidelines about where and how it can be invested.  The 130 billion dollar Reserve Fund can only used to purchase fixed income, top-rated securities… The 32 billion dollar NWF has been earmarked for higher-risk — and, Moscow hopes, higher-return — investments…

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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