Brazil Forms Sovereign Wealth Fund Advisory Board - WSJ.com

Brazil Forms Sovereign Wealth Fund Advisory Board
BRASILIA (Dow Jones)--Moving forward with the administration of its recently created sovereign wealth fund, Brazil's government on Monday established a special advisory board to supervise the fund's investment decisions, according to a presidential decree published in the country's federal register.

Under the decree, the board will be headed by the country's Finance Minister, Guido Mantega, and will also include Planning Minister Paulo Bernardo and the president of the country's central bank, Henrique Meirelles.

Votes from only two of the board's three members will be necessary, however, to ratify decisions on the fund's investments.

The board will meet regularly on a quarterly basis, though extraordinary board meetings can be called by its president.

Among its responsibilities, the board will approve investment return targets, ratify the fund's budgeting decisions, and create a technical consulting committee.

Brazil created the sovereign wealth fund in late 2007 with the aim of reinforcing public sector savings and funding projects of strategic interest abroad.

The sovereign wealth fund currently manages 16.3 billion Brazilian reals ($9 billion), up from 14.3 billion when it was established in late 2008.

According to the fund's rules, fund investments overseas must obtain a minimum return equivalent to the six-month London Interbank Offered Rate. Investments in Brazil must obtain a minimum return equivalent to the country's TJLP long-term interest rate, currently at 6% annually.

The fund also will be free to buy dollars in the local currency market as part of its investment strategy.

Upon formalization of the fund's management rules in December, the government named central bank career employee Luiz Claudio Portela as the chief administrator for its day-to-day operations.

-By Gerald Jeffris, Dow Jones Newswires; 5561-3335-0832; gerald.jeffris@dowjones.com