18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.
18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.
18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.
18.3. A description of the investment policy of the SWF should be publicly disclosed.
The management of the Fund’s deposits, as stated in The Contract, will rely upon on the TESOFE. Therefore, the legal framework that defines the investment strategy is provided by three main sources: the TESOFE Law, the TESOFE’s Regulation Document, and the Investment Guidelines designed by the TESOFE’s Technical Committee. The first two lay out broad outlines and principles of its management policies, while the third specifies details on the portfolio investment strategy. Due to the Fund’s nature, the investment strategy is a passive management, focusing on maintaining low risk and high liquidity. This framework fulfils the principles of a sound and strong portfolio.
The BISF’s investment policy is guided by sound principles that guarantee an efficient management through clearly defined control mechanisms.
For the implementation of hedging programmes aimed to contribute to the stabilisation of Federal Government’s revenues, the Federal Government requests Banco de Mexico’s intermediation to invest BISF resources in the acquisition of financial derivatives to reduce the exposure of Federal Government revenues in accordance with the approvals of the Technical Committee.
The BISF operates under a public framework that offers the necessary information for a broad understanding of the investment policy.