Kazakh Oil Fund Earned $900 Million on Investments Last Year

Jan 14. Bloomberg

By Nariman Gizitdinov

Kazakh Oil Fund Earned $900 Million on Investments Last YearKazakhstan’s National Oil Fund said sales of Greek, Spanish and Portuguese sovereign bonds helped it to earn about $900 million on its investments last year.

The fund’s investment income was earned “largely thanks to a diversified investment policy as well as a timely response to changes in the situation on world financial markets,” said Yeszhan Birtanov, deputy director of the central bank’s Monetary Operations Department.

“In particular, the bond portfolio benchmark was changed to exclude euro-zone countries whose credit ratings were worsening,” Birtanov said today in an e-mailed response to questions. The oil fund is managed by the central bank.

Kazakhstan, which holds about 3 percent of the world’s oil reserves according to BP Plc, created the fund in 2000 to guard against declines in the price of crude.

Central bank Chairman Grigori Marchenko said on Nov. 2 that the fund had sold its positions in Greek, Spanish and Portuguese sovereign bonds in the first half of 2010 without suffering “particular losses.”

The fund’s benchmark portfolio for bonds comprises 40 percent U.S. Treasuries with maturities of one to five years, 35 percent euro-area debt rated AA or AAA with maturities of one to 10 years, 10 percent each of 1- to 10-year U.K. gilts and Japanese bonds, and 5 percent 1- to 10-year Australian bonds, according to the central bank.

The fund’s assets rose 26 percent to 5.69 trillion tenge ($38.6 billion) in 2010 from 4.5 trillion tenge in 2009 on higher revenue from oil-industry taxes, accounts posted on the Finance Ministry’s website show.

After losing money on investments in the first half of 2010, the fund turned a profit through three quarters as the value of its securities and assets increased, Birtanov said.

The fund earned 919 billion tenge in 2009, the Finance Ministry said on its website.