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Abu Dhabi Investment Authority reveals reason behind good returns

IFM_Abu Dhabi Investment Authority
Abu Dhabi Investment Authority said it gave front-line managers more freedom as part of a larger plan to streamline internal processes

One of the world’s most prominent sovereign wealth funds, the Abu Dhabi Investment Authority (ADIA), said that high gains were achieved in 2021 thanks to a banner year for stocks.

Abu Dhabi Investment Authority, which is thought to be in charge of USD 708 billion worth of assets, also said in an annual report that it had reorganised parts of the company by merging different departments and putting some operations in one place.

On a point-to-point basis, its 20-year and 30-year annualised rates of return were both 7.3% at the end of the previous year, up from a 20-year rate of 6% and a 30-year rate of 7.2% in 2020.

The Abu Dhabi-based fund stated that “Abu Dhabi Investment Authority sought out opportunities in areas and sub-regions with significant potential over the long run and is continuing to build out its direct exposure to private markets.”

It also made money by allocating its stock portfolios to take advantage of new opportunities, such as those created by the different ways the government dealt with the COVID-19 pandemic.

According to Abu Dhabi Investment Authority, its long-term portfolio strategy places 45% to 60% of its exposure in North America, 15% to 30% in Europe, and 10% to 20% in developing economies. In addition, 32% to 42% of the total asset allocation was invested in developed stocks.

As part of its restructuring efforts, the fund set up a Core Portfolio Department, which it says makes “trading and rebalancing more efficient and flexible.”

The Central Investment Services Department established “a single point of visibility” for the entire portfolio and practical investment support activities across the organisation.

Abu Dhabi Investment Authority said it gave front-line managers more freedom as part of a larger plan to streamline internal processes and improve the ability to respond quickly to new opportunities.

The fund reported a decrease in headcount overall, but it did not specify by how much. According to the report, Abu Dhabi Investment Authority employs 1,520 people.

According to sources who spoke to Reuters in March, Abu Dhabi Investment Authority eliminated dozens of positions to improve efficiency and save about 1 billion dirhams (USD 270 million).

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