NSIA Funds
Stabilization Fund
The Stabilization Fund (SF) is the smallest of the three NSIA pools of capital, with a 20% allocation of Funds under Management. The purpose of the SF is to act as a buffer against short-term macro-economic instability associated with considerable government revenues derived from hydrocarbon exports.
Objective
To provide stabilisation support in times of economic stress.
Initial %Assets Allocation & Size
20% allocation / US$200 million
New % Allocation & Current Size**
20% allocation / US$300m
Strategic Asset Allocation / Focus Sectors.
Asset Class Allocation
| US Treasuries & Investment Grade Corporate Fixed Income | 75% |
| Cash | 25% |
Mandate / Recent Investments
Capital preservation and liquidity. The Stabilization Fund thus has a short-term investment horizon and invests in high-quality fixed income mandates.
Expected Average Annualized Returns
US CPI
Investment Horizon
Short Term
The Stabilization Fund (SF) is intended to act as a buffer against short-term macroeconomic instability. The SF’s assets are therefore to be invested conservatively, striking a balance between generating a modest positive return and preserving capital in nominal terms. Given the unpredictable and short-term nature of the Fund’s potential liabilities, immediate liquidity is also required. Withdrawals from the SF will be made at the direction of the Minister of Finance, upon satisfaction of the criteria set out in the NSIA Act.
The SF has a short time horizon and a low returns target. The asset allocation is split between Hedge Assets and Growth Assets. Investments are made conservatively with a focus on liquidity given the unpredictable nature of the fund cash calls. Given these considerations, the asset allocation below was set.
The FGF has a long investment time horizon of greater than 20 years, effectively spanning multiple economic and market cycles. This, coupled with the Fund’s payout requirements, allows management to gain exposure to certain asset classes that are less liquid and can therefore attain greater risk-adjusted returns.
