Africa-Press – Angola. The new Investment Policy of the Angolan Sovereign Fund (FSDEA) for the five-year period 2024/2028, approved by the Head of State, João Lourenço, in the Official Gazette of 21 October, aims to increase national wealth, through strategic and responsible management of sovereign resources, allocating them to investments in the country and abroad.
The document aims to define the Fund’s general lines of action, set the maximum percentages to be allocated to the different asset classes, as well as the guidelines that govern the management and strategic application of assets, with a view to pursuing its objectives, whose prudent criteria in the risk/return relationship allow the maximization of returns, minimizing risks.
The Fund should contribute to the creation and maintenance of alternative sources of wealth for the country, considering the long-term interests of Angolan citizens, prioritizing the function of savings and generational transfer of wealth.
The approval of the instrument is also based on the need to determine the objectives that the Fund intends to achieve and to delimit the action, investment limits and degree of risk of the Angolan Sovereign Fund, whose purpose is to save and transfer wealth to future generations and maximize results.
The FSDEA may also, in accordance with the Decree we have cited, be mandated to manage resources that may be allocated by the State for specific purposes, such as fiscal stabilization or the implementation of structural projects on a national scale.
As a long-term public asset management entity, in the execution of the investment policy, the document states that the Fund must operate with total autonomy and independence from the direct and indirect State administration bodies, and, taking into account its nature and activity, must always be subordinate to the principles of financial profitability and protection of the allocated capital, and the investments it makes must reflect compliance with the purposes for which it was created.
The asset allocation and, consequently, the constitution of the Fund’s global investment portfolio must, according to the Decree, be a minimum of 20 percent, limited to a maximum of 50 percent of the capital, which is invested in fixed income assets, issued by supranational agencies or institutions of countries, mainly from the G7, or other economies, companies and financial institutions, mostly with an investment grade rating, issued by one of the five main risk rating and classification bodies.
The Fund may use financial hedging instruments, including derivatives, exclusively to hedge investment risk, with the returns on invested capital being used primarily for reinvestment and to cover operating expenses, and may be used for other expenses, including but not limited to social responsibility and development support projects, in accordance with the provisions of the annual or multi-annual investment plans.
Investments correlated with the Oil Sector must not exceed five percent of the assets under management of the Fund.
The Sovereign Fund’s main investment operating currency, the document states, is the US dollar, although it may invest in other currencies, with the exposure being defined in the asset allocation strategy, always taking into account the risk/return relationship and the macroeconomic environment.
External managers
Furthermore, according to the Presidential Decree, external asset managers are licensed entities dedicated to managing third-party financial resources, through segregated accounts or via collective funds.
In addition to internal management, the document describes that the Fund may, within the scope of implementing the investment strategy, engage external asset managers, and this engagement must be inseparable from the investment decision, and the Board of Directors must determine the criteria, requirements, terms and conditions for hiring/engaging investment managers.
The hiring of managers is guided by criteria aligned with investment, competence, quality, credibility, suitability, reputation and proven experience in the area of specialization in question.
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