SOFAZ diversifies its portfolio as Azerbaijan’s oil era matures |
Last week, Azerbaijan's sovereign wealth fund SOFAZ released one of its traditional monthly reports. Despite the previous increases in its statistics, this time, however, the revenue has dropped slightly, raising the question of whether this signals a risk warning or simply a recalibration. Well, the mathematics of Azerbaijan's State Oil Fund in the first six months of 2026 looks promising, at least at face value. Its total assets were $72.6 billion in July, representing a 9.1% rise from last year and an easy beat of the $64.8 billion that SOFAZ's own investment strategy had estimated as its weighted-average asset size in 2026. SOFAZ's portfolio of investments has indeed expanded. Its equity exposure is up. It has invested in Italian solar plants, UK airports, and private equity firms based in Dubai. The numbers, to sum it all up, look good. Dig a little deeper into the issue, and one gets an even more revealing picture.
During the first six months of the year, real income of SOFAZ was less than its expenses; the difference was 1.5 billion manats (approximately $882.4 million), to be exact. And the deficit had to be covered by spending the existing reserves. The off-budget deficit of the fund was about 3.7 billion manats (approximately $2.18 billion), mainly due to changes in exchange rates and due to the decline in gold prices during the first quarter (which resulted in the loss of value of significant gold reserves held by the fund). About 22 tonnes of gold were officially sold by the fund during the first quarter to balance the portfolio within legal limits; however, according to analysts, it is a coincidence that this occurred during January-February, when oil prices were at their lowest.
SOFAZ Overview in exact numbers for H1 2026 are like this:
$72.6 billion - Total assets as of July 1, 2026, reflecting a 9.1% increase year-on-year.
178.1 tonnes - Gold reserves remain at 178.1 tonnes, unchanged since the end of Q1, despite a 22-tonne sale in January-February.
28.1% - The equities share of the portfolio has risen by........