Mozambique’s Sovereign Fund (FSM) will direct 70% of its investment portfolio toward US benchmark indices and the remaining 30% toward European indices, according to the Investment Master Plan recently approved by the government.
According to Lusa, the plan establishes that, in an initial phase, the management of the Fund’s resources will reference two international indices composed essentially of sovereign bonds from the United States and the Euro Zone.
Of the total portfolio, 70% will be benchmarked against the ICE BofA 0-5 Year US Treasury Index, linked to US Treasury securities with maturities of up to five years, while 30% will follow the ICE BofA 0-3 Year Euro Government Index, composed of Euro Zone sovereign debt.
Operational management of the resources will fall to the Bank of Mozambique, which is expected to adopt an index-replication strategy, while retaining the ability to make limited deviations with the aim of improving investment returns within the established risk parameters.
The Master Plan also stipulates that at least 75% of the Sovereign Fund’s portfolio must be invested in government bonds that form part of the selected indices, with exposure to other financial instruments capped at a maximum of 25%. Permitted assets include Treasury Bills, term deposits, certificates of deposit, commercial paper, sovereign bonds, instruments issued by government agencies, multilateral organisations, and certain covered bank bonds.
Although funded primarily by revenues from Mozambique’s natural gas sector, the FSM is prohibited from investing directly in companies or assets linked to the domestic economy. The document also bars investments with exposure to the oil and gas sector — a measure designed to reduce risk concentration in the very activity that constitutes the Fund’s principal source of financing.
Short selling will also not be permitted. According to the Master Plan, investment policy must prioritise capital preservation, liquidity availability, and the allocation of resources to low-risk instruments, while simultaneously seeking to maximise returns within prevailing market conditions and established limits.
On credit risk, investments must carry a minimum rating of A-, while exposure to any single issuer outside the benchmark indices may not exceed 10% of the portfolio. Operating costs associated with investment management are estimated at $73,000 in 2026, rising to $95,000 in 2027. Expenditures include financial platforms, information systems, custody services, and access to the index data providers used as benchmarks.
Mozambique’s Sovereign Fund was established to manage a portion of revenues derived from natural resource extraction, finance economic and social development, build savings for future generations, and support stabilisation of the state budget.
In its first seven months under Bank of Mozambique management, the Fund’s value grew by more than 7.5%, reaching $118.3 million. The government transferred an initial tranche of $109.9 million to the Bank of Mozambique on 10 December 2025 for the Fund’s capitalisation and operational launch.
A further injection of $6.1 million was made in January of this year. As of 2 July, the Fund held capital of $118.021 million.
Established by a decision of the Assembly of the Republic in December 2023, the Sovereign Fund is set to receive 40% of annual revenues from natural gas production. Projections indicate that, by the 2040s, gas revenues accruing to the state could reach approximately $6 billion per year.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/08/11/economia/financas/fundo-soberano-vai-aplicar-70-dos-investimentos-em-indices-dos-eua/
