Heritage Stabilisation Fund (HSF) performs well in Q3 2024

Background

The Heritage Stabilisation Fund (HSF) is a sovereign wealth fund established in March 2007. It was previously known as the Interim Revenue Stabilization Fund, which was established in 2000.

Current State

As of the end of September 2024, the total net asset value of the HSF was US$6,087.9 million, compared to US$5,761.3 million as of June 30, 2024.

Investment Portfolio Performance

The HSF’s Investment Portfolio returned 5.74 percent in the September 30, 2024 quarter, outpacing its benchmark, which increased by 5.44 percent. The declining interest rate environment provided a favorable backdrop for bond and stock markets. Over the period, strong gains in the US fixed income and developed equity markets contributed to the Fund’s positive performance.

Asset Allocation

The HSF is a long-term fund with two distinct elements: a stabilization component to insulate fiscal policy from fluctuations in energy sector revenues and a savings component for future generations. More emphasis will be placed on the savings component of this Fund.

The Investment Portfolio was valued at US$6,086.1 million, while the remaining portion was held in operating cash accounts to meet the day-to-day expenses of the Fund’s management.

Risks and Management

The main risks for the HSF portfolio are credit, concentration, interest rate, and currency risks. To minimize these risks, the Fund’s asset allocation is diversified across various asset types and positions.

The respective portfolios manage Interest rate risk using a weighted average practical duration limit. For the US Short Duration Fixed Income mandate, the allowable range is six months longer or shorter than the weighted average duration of its respective benchmark.

Currency risk is managed by containing and controlling the exposure to non-US dollar instruments. For the fixed-income mandates, no more than 10 percent of the portfolio’s market value can be invested in securities denominated in currencies other than the US Dollar.

Conclusion

The Heritage Stabilisation Fund has performed well in the third quarter of 2024, with its Investment Portfolio returning 5.74 percent. The Fund’s long-term approach and diversified asset allocation help to minimize risks and maximize returns.

FAQs

* What is the Heritage Stabilisation Fund?
The Heritage Stabilisation Fund is a sovereign wealth fund established in March 2007 to insulate fiscal policy from fluctuations in energy sector revenues and to save for future generations.
* What is the current net asset value of the HSF?
As of the end of September 2024, the total net asset value of the HSF is US$6,087.9 million.
* How does the HSF’s Investment Portfolio perform?
The HSF’s Investment Portfolio returned 5.74 percent in the September 30, 2024 quarter, outpacing its benchmark.