SHANGHAI, May 9: The chief of China’s 200-billion-dollar sovereign wealth fund Lou Jiwei said on Friday volatility in global financial markets had created greater opportunities for investment, although the risks were higher.

“The lower opportunity cost means we can go after better long-term investment returns,” Lou said at a financial forum in Shanghai, but warned greater prudence was key.

“It is not easy to pursue risk-adjusted long-term returns. We must resist the temptation of high-return (investments) and high-risk products and adhere to value-based investment,” he said.

China’s Investment Corp has recently expanded the scope of its investments beyond traditional assets like stocks and bonds to private equity and hedge funds.

“We have already invested in other sectors. The shareholdings are not concentrated, they are diversified,” said Lou, who refused to divulge details despite his firm having pledged greater transparency.

“We will disclose that after divesting our positions.”

Concerns on sovereign wealth funds secrecy has been on the rise in recent months with portfolios from Asia and the Middle East eagerly buying Western assets, such as financial institutions made cheaper by the US subprime crisis.

Western officials are pushing for a code of conduct to ensure the funds’ transparency and governance, and Lou said he was willing to take part in rules drawn up by the International Monetary Fund.

“Their requirements are basically the same as what Premier Wen (Jiabao) told us,” he said.

The IMF gathered in Washington this month to develop guidelines for state-controlled sovereign wealth funds, amid rising concerns about their financial clout coupled with political motivations. They outlined a plan to agree on voluntary guidelines for best practices for sovereign wealth funds.—AFP