Abu Dhabi Investment Authority – ADIA

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DEFINITION of ‘Abu Dhabi Investment Authority – ADIA’

The Abu Dhabi Investment Authority is a government-owned investment organization that manages the sovereign wealth fund for Abu Dhabi, United Arab Emirates. According to the Sovereign Wealth Fund Institute’s rankings, the ADIA sovereign wealth fund ranked as the third-largest in the world in 2018 with $828 billion in assets. It is one of the world’s largest institutional investors.

BREAKING DOWN ‘Abu Dhabi Investment Authority – ADIA’

The huge amount of wealth managed by the ADIA is sourced primarily from Abu Dhabi’s large oil reserves. The ADIA prefers to remain secretive, so not a great deal is known about its investment methodology or portfolio of holdings. In U.S. dollars, the 20-year and 30-year annualized rates of return
for the ADIA portfolio were 6.5% and 7.0% respectively, as of December 31, 2017, with performance measured based on underlying audited financial data and calculated on a time-weighted basis, the fund reported. “ADIA’s mission is to sustain the long-term prosperity of Abu Dhabi by prudently growing capital through a disciplined investment process and committed people who reflect ADIA’s cultural values,” the authority said in its 2017 annual report. “ADIA manages a global investment portfolio that is diversified across more than two dozen asset classes and sub-categories.”

About the Fund

The fund has 1,700 employees representing more than 65 nationalities. “As a long-term investor, ADIA places great emphasis on analyzing market trends and generating insights to make considered, deliberate and forward-looking decisions,” the fund stated.

The ADIA doesn’t make it investments are known to the public. As for investment strategy, it has this to say: “Investment strategy at ADIA begins with a clearly defined appetite for risk. This has been calibrated through a blend of publicly traded securities, known as the Reference Portfolio, developed to define the desired amount of market risk that should be accepted over the long term…maintaining and periodically reviewing ADIA’s Strategic Asset Allocation (SAA) across more than two dozen asset classes and sub-categories.”The broad asset categories it invests in include: Indexed Funds; Internal Equities; External Equities; Fixed Income & Treasury; Alternative Investments; Real Estate & Infrastructure; and Private Equities.

The fund manages some 45% of its assets, with around 55% “managed externally in areas including equities, fixed income, money markets, alternative investment, real estate and infrastructure, and private equities. We engage managers across the risk spectrum, from index-replicating to actively managed mandates, and typically tailor each investment to our specific needs and internal guidelines.”Norway’s sovereign wealth fund is the largest in the world and with over $1.03 trillion in assets it is growing fast.