Concept on the Management of Assets of the National Fund of the Republic of Kazakhstan until 2030, approved by Presidential Decree No. 282 of July 10, 2023

APPROVED

By Decree of the President

of the

Republic of Kazakhstan

of July 10, 2023

No. 282

CONCEPT

on the management of assets of the National Fund

of the Republic of Kazakhstan until 2030

Astana, 2023

Contents:

Section 1. Passport (main parameters) ………………3

Section 2. Analysis of the current situation ………………4

Section 3. Overview of international experience ………………8

Section 4. Vision for the development of the management of assets of the National Fund of the Republic of Kazakhstan ………………10

Section 5. Basic principles and approaches to the management of the National Fund of the Republic of Kazakhstan ………………11

5.1. Basic principles of management of assets of the National Fund of the Republic of Kazakhstan ………………11

5.2. Basic approaches to the management of assets of the National Fund of the Republic of Kazakhstan ………………11

Section 6. Target indicators and expected results ……………..16

Appendix. Action Plan for the implementation of the Concept on the management of assets of the National Fund of the Republic of Kazakhstan until 2030.

Section 1. Passport (main parameters)

Name	Concept on the management of assets of the National Fund of the Republic of Kazakhstan (hereinafter – the National Fund) until 2030
Basis for development	Concept of management of public finances of the Republic of Kazakhstan until 2030, approved by the Decree of the President of the Republic of Kazakhstan of September 10, 2022 No. 1005 Address of the Head of State to the people of Kazakhstan of September 1, 2021 "Unity of the people and systemic reforms – a solid foundation for the prosperity of the country"
State body responsible for the development of the Concept	National Bank of the Republic of Kazakhstan (hereinafter – the National Bank), Ministry of Finance of the Republic of Kazakhstan, Ministry of National Economy of the Republic of Kazakhstan
State bodies, organizations responsible for the implementation of the Concept	National Bank
Implementation period	2023 – 2030

This Concept on the management of assets of the National Fund of the Republic of Kazakhstan until 2030 (hereinafter – the Concept) defines the vision for the management of financial assets accumulated in the accounts of the Government of the Republic of Kazakhstan at the National Bank, transferred to the trust management of the National Bank on the basis of a trust management agreement of the National Fund concluded between the National Bank and the Government.

Section 2. Analysis of the current situation

The National Fund represents state assets in the form of financial assets accumulated in the accounts of the Government of the Republic of Kazakhstan at the National Bank, minerals transferred in fulfillment of tax obligations for the payment of tax on the extraction of minerals, rental tax on the export of crude oil, gas condensate, royalties, and the share of the Republic of Kazakhstan in the production sharing agreement in kind or money from their sale, in an amount determined in accordance with the tax legislation of the Republic of Kazakhstan, as well as other property, excluding intangible assets.

Trust management of the assets of the National Fund is carried out by the National Bank.

The main goal of creating the National Fund is the preservation of financial resources by forming accumulations for future generations and reducing the dependence of the republican budget and the country's economy on the oil sector and the impact of adverse external factors.

Accordingly, the National Fund performs savings and stabilization functions:

the savings function ensures the accumulation of financial assets and other property, excluding intangible assets, and the profitability of the assets of the National Fund in the long term at a moderate level of risk, thus aimed at solving the long-term task of saving oil revenues for future generations of the country;

the stabilization function is intended to maintain an adequate level of liquidity of the assets of the National Fund and is aimed at solving short-term tasks to meet the current needs of the republican budget.

It is necessary to maintain a high share of the stabilization portfolio in the composition of the National Fund, since the implementation of the stabilization function involves the allocation of targeted transfers transferred to the republican budget, as well as ensuring an annual guaranteed transfer, the volumes and timing of which are often subject to revision and increase during the year. The stabilization portfolio, in turn, consists of highly liquid, risk-free, and therefore low-yield money market instruments.

At the same time, approaches to the management of the savings portfolio of the National Fund were also based on conservative principles with a predominance of the goal of preserving assets. Thus, after the global financial crisis of 2008 and the collapse of stock markets, the savings portfolio was formed with a high share of bonds of developed countries at 80% and a relatively low share of stocks at 20%. As a result, the income received from asset management over the last 10–15 years turned out to be lower than the income of a number of sovereign wealth funds, including lower than the income of the Global Pension Fund of Norway.

Over the entire history of the existence of the National Fund (2000–2022), its average annual income was 3.02%, and the investment income from asset management in foreign currency amounted to 15.1 billion US dollars (about 27% of the foreign currency assets of the National Fund).

In 2022, significant changes occurred in global financial markets, major geopolitical shocks contributed to a sharp increase in energy prices, which, combined with high demand and supply constraints, led to a noticeable increase in inflation worldwide. Central banks of developed countries, in the fight against high inflation, tightened monetary policy by raising interest rates. At the same time, under conditions of record-high inflation, the traditional correlation between stocks and bonds was disrupted, leading to their simultaneous negative income. Since the assets of the National Fund are invested globally, it was impossible to avoid negative income on its assets.

The management of assets of the National Fund is similar to a complex mechanism with a large number of details that must work harmoniously. Thus, it is necessary to ensure compliance with regulatory requirements in dozens of countries, monitor and control thousands of transactions, maintain protection against cyberattacks, constantly evaluate new investment opportunities, and at the same time avoid bad investments. The team of specialists at the National Bank together with partners around the world has been ensuring the operation of such a complex mechanism for more than 20 years since the creation of the National Fund.

It is important to note that fluctuations in financial markets and, as a result, low, and in some years – negative income on investments is an integral and inevitable part of the investment process. At the same time, the higher the income goals, the higher the risks taken, that is, possible losses.

For example, as a result of the financial crisis, the global stock market fell in 2008 by (-)40.3%. By the end of the following 2 years, the MSCI index showed growth of 47.1%. In 2020: against the background of the pandemic and global lockdowns, the stock market decreased by (-)31.7%. However, stimulus measures to support the economy from the governments of developed countries gave impetus to the global stock market, as a result of which in the same year the stock index grew from its minimum values by 70.7%.

At the same time, achieving the result of increasing the income from the management of assets of the National Fund is possible provided that a more risky and, accordingly, more profitable investment policy is observed and disciplinedly implemented, the development of which should be based on the basic principles and approaches of long-term investors, and be reflected in this Concept.

Work on improving the approaches to the management of assets of the National Fund began in 2016. Thus, a new Concept of formation and use of funds of the National Fund was developed and approved, a limit on the maximum size of the stabilization portfolio was established at 10 billion US dollars.

In 2019, the transition began from a conservative (80% in bonds and 20% in stocks) to a balanced distribution of assets of the savings portfolio of the National Fund (60% bonds, 30% stocks, up to 5% alternative instruments, and up to 5% gold). At the same time, the historical average annual income of the savings portfolio with a conservative distribution for the period 2001–2018 was 3.79%.

The new distribution also implies diversification of the bond portfolio into government bonds of developed countries, corporate bonds, and government bonds of developing countries.

Uncertainty about further global economic growth, trade, political, and geopolitical tension in the middle of 2019 led to the next step of asset diversification – the inclusion of a gold portfolio with a gradual increase in its share from 3% to 5%.

Investing the assets of the National Fund in alternative classes of instruments – a certain class of non-traditional financial instruments (assets), will allow to increase income and reduce the correlation of investments to the market of traditional financial instruments, expanding additional diversification.

Thus, the goal of developing the Concept is to strengthen the foundation and establish the basics necessary for the National Bank to confirm its status as a long-term institutional investor.

At the same time, the implementation of a long-term strategy is possible only in the presence of certainty regarding withdrawals from the savings portfolio. Otherwise, there is a high probability of fixing losses during downturns in financial markets, which makes it impossible to fulfill the task of increasing income from asset management.

Over the last 10 years, the foreign currency assets of the National Fund have decreased from 77.4 billion US dollars to 55.7 billion US dollars. One of the reasons for such a significant reduction in the country's assets is the established trend of withdrawals from the National Fund to the republican budget in excess of receipts from the oil sector. Thus, since 2014, the most intensive spending of the National Fund has been observed with an increase over the previous period by more than 39%, with peak values in 2017 and 2020 (in 2017, with receipts of 2.1 trillion tenge, withdrawals amounted to 4.4 trillion tenge, in 2020 – with receipts of 1.4 trillion tenge, withdrawals amounted to 4.8 trillion tenge).

Also, since 2022, the practice of allocating bond loans from the National Fund to quasi-state sector entities has resumed.

As one of the solutions to the problem of the depletion of the National Fund by the Government of the Republic of Kazakhstan together with the National Bank, a countercyclical budget rule was developed, establishing a direct limit on the growth rate of planned expenditures of the republican budget at a level not higher than the average real growth of GDP over the previous 10 years, increased by the inflation target. At the same time, the size of the guaranteed transfer will be determined at an amount not exceeding the volume of receipts to the National Fund from the oil sector, forecasted at the reference oil price ("cut-off" price). This budget rule will be aimed at further accumulation of assets of the National Fund.

An additional tool for solving the problem is the conduct of a mandatory comprehensive procedure for assessment, analysis, and elaboration of both projects aimed at the development of critical infrastructure and the implementation of projects of national significance, as well as projects of the quasi-state sector, proposed for financing from the National Fund, and the search for alternative financial sources before making a decision on their financing from the National Fund.

At the same time, the National Fund faces tasks to increase its assets to 100 billion US dollars by 2030 and, starting from 2024, to implement the initiative of the President of the Republic of Kazakhstan on making payments to children from part of the investment income of the National Fund. The implementation of these large-scale initiatives must be ensured by a high level of asset savings of the National Fund, including by limiting withdrawals and increasing the fund's funding, as well as improving the quality of management and ensuring adequate investment income.

This, in turn, requires the development of this Concept, the definition of basic principles and approaches to management, contributing to the accumulation of assets of the National Fund.

Section 3. Overview of international experience

According to the Global Sovereign Wealth Funds agency, by the end of 2022, there are approximately 174 sovereign wealth funds in the world, the market value of assets under their management is estimated at 11.4 trillion US dollars (Global SWF Annual Report, 2023).

There are more than 30 countries in the world that have state wealth funds (stabilization and/or savings), formed from budget surpluses due to excess tax revenues from the export of non-renewable minerals.

When forming the National Fund and developing concepts for the management of its assets, the advanced experience of managing assets of the largest foreign funds, such as the Global Pension Fund of Norway, the New Zealand Superannuation Fund, the Alaska Permanent Fund, and others, was taken into account.

The Global Pension Fund of Norway was established in 1990 and performs two functions: accumulation and stabilization. The fund is financed from the surplus of oil revenues (minus annual transfers to the budget). Part of the oil receipts is used to cover the non-oil deficit, the level of which is set annually during the formation of the annual budget and is limited by the expected average real (inflation-adjusted) profitability of the fund.

The assets of the Global Pension Fund of Norway (hereinafter – the Norwegian Fund) are invested exclusively abroad to avoid overheating the Norwegian economy and to protect the reserves of this fund from the consequences of fluctuations in oil prices. The investment portfolio of the fund is diversified and consists of investments in stocks – from 60% to 80%, in fixed-income bonds – from 20% to 40%. In order to maximize income and taking into account risks within the investment policy, investments in alternative asset classes are permitted: in real estate – up to 7% and in infrastructure for renewable energy sources – up to 2% of the fund's assets. This investment strategy implies taking higher risks, while the long-term income of the Norwegian Fund also increases.

Actual investment management is carried out by the Bank of Norway. According to the mandate for the management of the Norwegian Fund, the Bank of Norway makes decisions and exercises ownership rights independently of the Ministry of Finance of Norway. At the same time, the Ministry of Finance of Norway bears overall responsibility for the management of this fund and determines the strategy for its management.

The New Zealand Superannuation Fund was founded in 2001 with the aim of accumulating funds to pay for future expenses on universal pension payments and is a long-term, growth-oriented global investment fund.

The New Zealand Superannuation Fund is managed by the Guardians of New Zealand Superannuation, which is an autonomous legal entity of the country, operating independently of the Government of New Zealand. Thus, it has operational independence regarding investment decisions and is controlled by an independent board of directors. The target distribution of the New Zealand Superannuation Fund in terms of risk and income expectations is a portfolio consisting of 80% stocks and 20% bonds. At the same time, to achieve such high income targets, the fund actively invests in illiquid assets, such as private equity and infrastructure investments.

The Alaska Permanent Fund is a sovereign wealth fund created in 1976 by the residents of the state of Alaska, USA, to preserve and convert the non-renewable oil and mineral wealth of the state into a financial resource for all generations of Alaska residents.

The fund is managed by an independent state organization – the Alaska Permanent Fund Corporation, which is tasked with managing and investing the assets of the Alaska Permanent Fund and other funds.

The Alaska Permanent Fund consists of two parts: the main account and the income reserve account. The funds of both accounts are invested using the same asset allocation, but there are significant differences in how they can be used by law: the principal is permanent savings, and the funds of the income reserve account are available for use. The benchmark asset allocation of the Alaska Permanent Fund for 2023: stocks – 36%, bonds – 20%, alternative instruments – 41%, liquid money market instruments – 3%. This fund has a diversified asset structure with a focus on alternative investments, including private equity, real estate, and infrastructure companies.

A common characteristic of the examples given is the presence of strict rules for withdrawing funds from funds, and in some cases, a complete ban on withdrawals. In some countries, planning of receipts and withdrawals is at a sufficiently high level, which allows cutting off withdrawals at the level of receipts before transferring funds to the fund.

For example, the funds of the Norwegian Fund can be used as transfers to the state budget only in accordance with a resolution of the Norwegian Parliament. Withdrawals from the Norwegian Fund are carried out in accordance with a fiscal rule, according to which the volume of the transfer should not exceed the long-term expected real income of this fund. Whereas withdrawals from the Alaska Permanent Fund in accordance with the law of the state of Alaska amount to 5% of the average market value of this fund over the first five of the previous six financial years. The management strategy of the New Zealand Superannuation Fund does not provide for the possibility of withdrawing funds in the short and medium term (the use of funds of this fund is not planned before 2050).

In general, despite the fact that rules for replenishment/withdrawal of funds in funds may differ from each other due to the internal features of the economies of various countries, strict compliance with established rules and their static nature allows these funds to identify a part of funds protected from withdrawals, or the entire fund as a long-term portfolio, the management of which allows implementing aggressive strategies, taking higher risks, which, accordingly, is reflected in the results of asset management.

In order to further develop and consolidate the practice of applying advanced experience, as well as to exchange knowledge on the management of sovereign wealth funds, the National Bank will carry out work on joining the International Forum of Sovereign Wealth Funds (IFSWF).

Section 4. Vision for the development of the management of assets of the National Fund

Against the background of an unpredictable geopolitical situation, the transition to a "green economy" and a low-carbon strategy, the task of strengthening the savings function of the National Fund becomes the most priority.

Increasing financial discipline due to strict compliance with the countercyclical budget rule will contribute to a reduction in withdrawals from the National Fund, which will significantly reduce the risks of transferring funds from the savings portfolio to the stabilization portfolio.

Accordingly, compliance with the countercyclical budget rule will allow balancing the savings and stabilization functions of the National Fund, which, together with maintaining a balanced strategic asset allocation of the savings portfolio, will increase the efficiency of managing the National Fund.

The National Fund is a fund for future generations, part of the investment income from which will be directed to children until they reach adulthood. Therefore, the management of assets of the National Fund has a long-term investment horizon, which implies the sequential implementation of the strategic asset allocation of the savings portfolio over the established period, regardless of short-term fluctuations in income and the receipt of negative income in individual years.

In accordance with the latest long-term (for 10–15 years) expectations for the capital market (LTCMA) of leading world financial institutions, the potential average annual income of the assets of the savings portfolio will increase by 1% relative to the conservative asset allocation for the period from 2023 to 2030.

In order to avoid the risk of violating the disciplined approach in the implementation of the strategic asset allocation of the savings portfolio in favor of speculative sentiments against the background of short-term trends in financial markets, frequent review of the strategic allocation of the savings portfolio is not planned.

Section 5. Basic principles and approaches

to the management of the National Fund

5.1. Basic principles of management of assets of the National Fund

The management of assets of the National Fund is based on the following principles:

1) diversification of investments – distribution of investments by asset classes, countries, and currencies, management styles, including by attracting external managers, which implies minimizing risks without reducing investment income, due to a compensatory effect, when a decrease in the cost of one asset is compensated by an increase in the cost of another;

2) risk management – constant search for a balance between goals to maximize income and minimize risks in conditions of uncertainty of financial markets within individual asset classes and in aggregate, which is ensured by a combination of experienced personnel, quantitative and qualitative analysis tools, and reliable risk control mechanisms;

3) accountability – mandatory annual publication of information on the trust management of assets of the National Fund within the Report on the formation and use of the National Fund, approved by the Decree of the President of the Republic of Kazakhstan, indicating the results on investment income in the long-term horizon for the last 5 and 10 years and from the beginning of asset management of the National Fund;

4) efficiency – management of assets of the National Fund, based on the need to multiply and ensure the preservation of assets by achieving income in the long term at a moderate level of risk and under strict compliance with the countercyclical budget rule.

5.2. Basic approaches to the management of assets of the National Fund

The National Bank will continue to use a number of investment strategies in the management of assets of the National Fund, the main of which is the use of strategic allocation in the savings portfolio. This strategy makes the greatest positive contribution to the income of the fund. It allows realizing the advantages of a long investment horizon, when the limited need for liquidity helps to overcome a period of significant fluctuation in the value of the fund and continue investing to extract the embedded benefit.

In addition to the strategic allocation by the National Bank, an investment selection approach based on fundamental analysis using both internal and external competencies is applied. The experience of the National Bank specialists and the delegation of part of the powers to external managers allow making balanced and timely investment decisions regardless of the market situation.

The full list of permissible instruments for investing the assets of the National Fund is specified in the List of permitted financial instruments for the placement of the National Fund, determined by the Government of the Republic of Kazakhstan jointly with the National Bank upon the proposal of the Council for the Management of the National Fund of the Republic of Kazakhstan, excluding intangible assets.

The task of the National Bank in managing the National Fund is to ensure a high level of profitability in the long term at moderate risk, for the preservation, maintenance of a sufficient level of liquidity, and multiplication of the assets of the National Fund.

To avoid overheating the national economy and protecting the assets of the National Fund from the consequences of oil price fluctuations, the placement of the assets of the National Fund is carried out in financial instruments traded on foreign financial markets.

Detailed description of the investment parameters of the National Fund is defined in the Rules for carrying out investment operations of the National Fund of the Republic of Kazakhstan, approved by the resolution of the Board of the National Bank dated July 25, 2006 No. 65, registered in the Registry of state registration of normative legal acts under No. 4361 (hereinafter – the Rules). To minimize default risks, the Rules regulate all necessary limits and restrictions, including on the minimum credit rating.

Within the framework of the Rules, the National Bank independently carries out the investment of the assets of the National Fund in instruments traded on foreign financial markets, including the transfer of part of the assets of the National Fund under the management of an external manager. Control over the activities of external managers is assigned to the National Bank. At the same time, the transfer of part of the assets of the National Fund to external management implies only providing access to part of the assets in the accounts of the National Bank.

During periods of economic growth, the National Fund ensures the sterilization of excess currency inflow, reduction of pressure on the exchange rate of the tenge and inflation, thereby ensuring macroeconomic stability of the country's economy.

The following approaches are the basis of the policy on the management of assets of the National Fund:

1) portfolio management of assets. This approach consists in selecting investments in the most efficient manner in accordance with the goals of the portfolios of the National Fund. Accordingly, the investment of the assets of the stabilization portfolio is carried out in money market instruments due to regular withdrawals to the republican budget, and the investment of the assets of the savings portfolio is carried out in long-term financial instruments in accordance with a balanced strategic allocation of assets.

The implementation of the stabilization function implies ensuring transfers to the republican budget. Part of the National Fund used to carry out the stabilization function is determined in the amount necessary to ensure a guaranteed transfer.

Accordingly, the main goal of the stabilization portfolio is to maintain a sufficient level of liquidity of the assets of the National Fund. The profitability of the stabilization portfolio of the National Fund is not an indicator of the efficiency of the management of assets of the National Fund either in the short term or in the long term.

All receipts and withdrawals of assets are carried out through the stabilization portfolio of the National Fund.

The maximum size of the stabilization portfolio of the National Fund is $10 billion. In the event that, by the end of the year, the size of the stabilization portfolio exceeds $10 billion, money in the amount of the difference is transferred from the stabilization to the savings portfolio.

In case of insufficient assets of the stabilization portfolio for the allocation of transfers to the republican budget and (or) the placement of the National Fund in Kazakh financial instruments, a transfer of part of the assets from the savings portfolio to the stabilization portfolio is made.

In the framework of the implementation of the stabilization goal, the National Bank, depending on the situation in the financial market, carries out the conversion and reconversion of the assets of the National Fund on the organized currency market in the manner established by the Board of the National Bank. These operations are carried out to allocate transfers to the republican budget and do not relate to interventions of the National Bank.

The implementation of the savings function implies the accumulation of funds from the sale of non-renewable energy resources for future generations, as well as their multiplication due to investment income. At the same time, due to volatility in financial markets, the value of the assets of the National Fund may fluctuate significantly from year to year.

Accordingly, the goal of the savings portfolio is to ensure a high level of profitability in the long term at a moderate level of risk.

At the same time, an increase in profitability often leads to a disproportionate increase in risks, i.e., a much more significant increase in the probability of losses compared to potential profitability. To avoid taking excessive risks, the National Bank, in an attempt to increase the profitability from the management of assets of the National Fund, strives to preserve or increase the risk premium, which is a significant challenge for the trustee. The savings portfolio of the National Fund has no restrictions on volume.

The strategic allocation of the savings portfolio of the National Fund determines its expected profitability and moderate level of risk. Target shares of the strategic allocation of the savings portfolio: 60% bonds, 30% equities, up to 5% alternative instruments, and up to 5% gold.

This also implies diversification of bonds into government bonds of developed countries, corporate bonds, and government bonds of developing countries.

In order to increase the efficiency of the management of assets of the National Fund and achieve excess returns, tactical deviations from the balanced strategic allocation of assets of the savings portfolio are allowed in accordance with the restrictions established in the Rules.

To achieve the goal of increasing the long-term expected profitability and maintaining the overall systematic risk of the savings portfolio, a return to target shares is carried out – portfolio rebalancing, that is, a counter-cyclical investment approach will be applied.

Regular portfolio rebalancing, providing for the mandatory return to the target strategic allocation of assets of the savings portfolio, not only allows to benefit from the "sell high, buy low" strategy[1], but also serves as protection from speculative investment decisions during periods of volatility.

Portfolio rebalancing is carried out on an annual basis in case of deviation of the share of an asset class of a balanced distribution from its target weight by more than 3% of the threshold value. At the same time, with regard to alternative instruments, it is carried out taking into account liquidity and costs associated with portfolio rebalancing. After completing the transition to a balanced strategic allocation of the National Fund by the end of 2023, the practice of annual return to the established target shares of financial instruments will be introduced, which will be enshrined in the Rules;

2) improvement of asset management processes. This approach implies the improvement of the asset management process using innovative technologies and increasing the competence of National Bank employees, as well as an investment culture based on advanced foreign experience.

The practice of using modern technologies in asset management will continue, with a focus on innovation for the effective implementation of investment decisions.

In addition, the National Bank will direct efforts to the development of competencies, which consists in constantly increasing the concentration of employees with the highest qualifications, as well as in the application of expertise and consultations of the best foreign managers in the field of asset management;

3) assessment of the efficiency of asset management of the National Fund. The assessment of investment management of the assets of the National Fund is carried out in a long-term horizon using the method of sliding assessment for the last 5, 10 years and from the beginning of asset management.

The base currency of the National Fund for the purpose of assessing the profitability of management of its assets is the US dollar.

The results of the management of assets of the National Fund are understood as the results of carrying out investment operations of the National Fund in foreign currency within the framework of investing in instruments traded on foreign financial markets. At the same time, the assessment of the efficiency of the management of assets of the National Fund on Kazakh financial instruments is not carried out.

The criterion for assessing the efficiency of management of the National Fund is the excess return of the portfolios of the National Fund over a certain period of time while observing the restrictions established in the Rules. Excess return is defined as the difference between actual profitability and the profitability of the corresponding benchmark portfolio.

A balanced allocation of assets of the National Fund implies the presence of several benchmark portfolios. As a benchmark portfolio, indices developed and monitored by leading world financial companies or the National Bank and determined in accordance with the Rules are used.

Inflation indicators and profitability of individual classes of financial instruments are not guidelines for assessing the efficiency of the management of assets of the National Fund. In addition, the profitability of individual operations with assets of the National Fund, as well as the profitability of individual portfolios of the National Fund is not an indicator of the efficiency of the management of assets of the National Fund.

The results of management for individual portfolios that ceased to exist during the reporting period are included in the historical analysis as components of portfolio profitability.

The efficiency of management of the savings portfolio is assessed in the long term and, in general, reflects the efficiency of the management of assets of the National Fund.

The long-term investment horizon of the National Fund protects the assets of the National Fund from making situational investment decisions, especially during periods of significant turmoil in financial markets. At the same time, the assessment of the efficiency of the management of assets of the National Fund based on short-term profitability indicators leads to negative consequences and a decrease in the efficiency of the management of assets of the National Fund.

Section 6. Target indicators and expected results

Target indicator – an increase in long-term profitability (for the period from 2023 to 2030) of the savings portfolio of the National Fund with a balanced strategic allocation of assets of the National Fund (with target allocation: 60% bonds, 30% equities, up to 5% alternative instruments, and up to 5% gold) compared to a conservative allocation (80% – bonds of developed countries, 20% – equities).

Expected result – an increase in the profitability of the assets of the National Fund for the period from 2023 to 2030 by at least 1% (in annual terms) relative to the conservative allocation of assets, which will contribute to an increase (provided that the counter-cyclical budget rule is observed) by 2030 to the volume of assets of the National Fund to $100 billion.

Measures for the implementation of the Concept will be carried out in accordance with the Action Plan for the implementation of the Concept on the management of assets of the National Fund until 2030 in accordance with the appendix to this Concept.

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APPENDIX
to the Concept on the management of assets of the National Fund of the Republic of Kazakhstan until 2030

of July 10, 2023

No. 282

ACTION PLAN

for the implementation of the Concept on the management of assets of the National Fund of the Republic of Kazakhstan until 2030

No. p/p	Name	Form of completion	Completion date	Responsible performers

1	2	3	4	5
1. Asset management policy of the National Fund
Target indicator: Increase in long-term profitability (for the period from 2023 to 2030) of the savings portfolio of the National Fund with a balanced strategic allocation (with target allocation: 60% bonds, 30% equities, up to 5% alternative instruments, and up to 5% gold) compared to a conservative allocation of assets of the National Fund (80% – bonds of developed countries, 20% – equities).
1.	Amendments and additions to the resolution of the Board of the National Bank of the Republic of Kazakhstan dated July 25, 2006 No. 65 "On approval of the Rules for carrying out investment operations of the National Fund of the Republic of Kazakhstan"	draft resolution of the Board of the National Bank	2023	National Bank, MoF
2.	Publication of the results of investment management of assets of the National Fund within the annual report of the National Bank	placement of the report on the Internet resource	annually, June	National Bank
3.	Joining the International Forum of Sovereign Wealth Funds (IFSWF)	information to the Administration of the President of the Republic of Kazakhstan	2027	National Bank, MoF
4.	Intermediate assessment of profitability after 5 years after the transition to a balanced allocation of the savings portfolio of the National Fund	placement of the report on the Internet resource	2028	National Bank

Note: decoding of abbreviations and abbreviations:

National Bank	–	National Bank of the Republic of Kazakhstan
National Fund	–	National Fund of the Republic of Kazakhstan
MoF	–	Ministry of Finance of the Republic of Kazakhstan

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1. One of the common investment strategies, providing for sale at the peak, purchase at the bottom. ↑