Investing in Fannie Mae & Freddie Mac at 1.5% a year is nothing to proud of, Accord Invest says

‘The state invested some $121bn in the U.S. mortgage agencies’ bonds at the beginning of the year. Less than $50bn is left of this now, which means we’ve spent about $70bn, while the ROI only came to $1bn, or approximately 1.5%. The profit of 1.5% to 2% a year is nothing to be proud of; these investments turned out to be even less lucrative than the agencies’ bonds themselves: these yielded about 4.5% a year in 2007,’ says Accord Invest’s Deputy GD Konstantin Selyanin.

During his conference with the State Duma’s Spravedlivaya Rossiya group, Deputy Head of Russian Federation Government and Finance Minister Alexei Kudrin said that investing in the Federal National Mortgage Association and the Federal Home Loan Mortgage Company (Fannie Mae & Freddie Mac) resulted in over $1bn in terms of profit. At the same time, the Bank of Russia’s First Deputy Chairman Alexei Ulyukaev reported earlier that Russia’s investments in the U.S. agencies had gone down by 40% since the beginning of the year. The bank executive explained the sum of investments thus only amounted to less than $50bn, so the initial investments must have amounted to about $100bn.

‘It’s good that at least this money did not get entirely wasted. Getting to keep the money can be seen as a relatively good and painless outcome, since the bonds were retired by the central banks which invested billions of dollars in them and the process was supported and monitored by heads of states and finance ministries,’ Konstantin Selyanin notes.

‘As investing in American securities is quite risky because of the U.S. stock market’s unpredictable losses upon recovering from the global liquidity crisis, I think it reasonable to invest very little in them, or not to invest at all. If one wants to invest in securities, it’s wise to choose some more stable and reliable countries, like Switzerland, for instance. At the same time, our government could reconsider their state reserve policy. Investing more in the country’s own economy would be very desirable,’ he says.


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