Russian National Wealth Fund

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Russian National Wealth Fund
Sovereign wealth fund
Founded 2008
Total assets $72.71 billion as of September 2016[1]

The Russian National Wealth Fund is Russia's sovereign wealth fund. It was created after the Stabilization Fund of the Russian Federation was split into two separate investment funds on 30 January 2008. The two funds are the Reserve Fund, which is invested abroad in low-yield securities and used when oil and gas incomes fall, and the National Wealth Fund, which invests in riskier, higher return vehicles, as well as federal budget expenditures. The Reserve Fund was given $125 billion and the National Wealth Fund was given $32 billion. The fund is controlled by the Ministry of Finance. One of the fund's main responsibilities is to support the Russian pension system.[2]

The National Wealth Fund will receive funds from investment returns or any excess funds that the Reserve Fund produces. The Reserve Fund is capped at 10% of Russian GDP, and any funds over that will be given to the Wealth Fund. The fund also has accumulated $72.71bn (as of 1 September 2016) from taxes and duties it collects on the production and export of oil and gas.[2]

According to the Russian Ministry of Finance, the foreign debt securities the fund can invest in must have ratings of AA- or higher by Fitch or Standard & Poor's, or a rating of Aa3 by Moody's.[2] Despite this, the fund agreed to buy (on 17 December 2013) $15 billion of Ukrainian Eurobonds, despite the fact that Ukraine had lower credit ratings at the time.[2][3][4]

It has been proposed that the fund put some of its reserves into infrastructure projects in Russia, so it can provide a boost to the slow modernisation of its infrastructure in a time of otherwise anaemic investment.[2] But as of 18 December 2013 this did not happen.[2]

From July 2014 to September 2016 the fund shrunk by $15.26 billion, from $87.97 billion to $72.71 billion.[1]