National Welfare Fund to invest in shares and corporate bonds

Russia’s National Welfare Fund, created from windfall oil revenues, will invest up to 50% of its funds in shares and 30% in corporate bonds, commencing from the start of 2009 according to Deputy Finance Minister, Dmitry Pankin.

Currently Russia invests its funds largely in bonds from government linked authorities in the U.S, U.K, Germany France and the Netherlands.  The move is intended to see the fund focus on generating higher returns, over a 10-15 year timeframe, with the Deputy Finance Minister noting,

``We are analyzing the possibility of investing money from the fund not just in the shares and currency of the G-8 countries, but also the shares and currency of a broader circle of countries with fast developing markets,''  

The National Welfare fund is to be used to supplement pensions in the future, and depending to the oil price could be worth as much as $100 Billion by the end of this year, according to the Deputy Minister.  He added that the extent of investment in Russian stocks and bonds would depend upon the inflationary environment, with the first priority being the fight against inflation.