15% of the Country’s Reserves Can Be Invested in Shares

It is a reasonable idea if that issue is handled carefully. In particular, the Rosfinagetstvo can make long-term investments in shares, but no more than 10% to 15% as they are risk-related, anyway.  A large portion of funds is still to be invested in conservative instruments, that is, bonds and deposits.  

Incidentally, such a form of investment for the purpose of receiving higher yield on the entire portfolio with an acceptable level of risk is justified by international experience. Many pension funds in other countries invest a portion of their funds in shares though it is clear that they must guarantee payment of pensions. Many insurance companies do the same.

Actually, if a portion of funds of the National Welfare Fund is going to be invested in shares it is to be remembered that for a certain period of time those funds cannot be used in case of a crisis. It may happen that if funds of the NWF are invested in shares, while during a crisis they are needed for financing of anti-crisis measure a considerable portion of those funds can, certainly, be lost because stock markets will fall. So, if a long-term investment is meant, the government should keep that in mind.   

When  deciding which shares are the best ones for investment of the NWF funds it is hardly reasonable to invest all of them in the Russian stock market which is exposed to fairly high fluctuations. As it is unclear where next problems may arise in the world, it would be better to distribute funds evenly among OCED states and developed countries only.

P.V. Trunin, PhD (Economics), Head of the Monetary policy Department