Dubai: Abu Dhabi Investment Authority (Adia) said they made great strides in developing internal capabilities and increasing its internal flexibility to adapt to changing market conditions as the sovereign wealth fund celebrates its 40 years existence.
In an open letter on Monday, Managing Director of Adia, Shaikh Hamed Bin Zayed Al Nahyan said the institution has witnessed much in its history, from market booms to steep declines, and wide swings in commodity prices.
“The responsibility we hold requires us to navigate with a steady hand through all conditions, never losing sight of the horizon. This ensures we are able to fulfil our obligations at all times, without compromising our long term investment goals or reputation in the market,” he said.
“We now have investments in more than two dozen asset classes and categories. We are also continuing to evolve, both in terms of how we invest and in how we are structured, in order to maximise our effectiveness and ability to capture opportunities.”
Established in 1976, Adia manages a global investment portfolio diversified across more than two-dozen asset classes and subcategories, including quoted equities, fixed income, real estate, private equity, alternatives and infrastructure.
Its recent investments include a 36 per cent stake in the Phoenix power plant in Peru, a development project for a 38-storey office tower in Paris’s La Defense district, investments to the tune of $750 million into the Prologis China Logistics Venture and a $10.3 billion joint venture acquisition of the Transgrid electricity transmission business in Australia.
Shaikh Hamed said its initial strategy was simple, focused on stocks and bonds, with a small number of respected external managers overseen by the internal team.
“Our philosophy was based on the simple but unshakeable belief that while risk taking is part of the business of investing, our reputation must always come first. While a profitable investment might be forgotten soon, a single error of judgement could be remembered for years.”
Adia recognised that market downturns were an inevitable part of every cycle and not cause for panic, but rather an opportunity for patient investors, Sheikh Hamed said.
“This can be seen through Adia’s proven track record in generating steady returns over the decades, irrespective of market conditions.”
Fitch Ratings in a report last month said the assets of Adia will probably shrink by billions of dollars by the end of this year as the emirate’s government taps its sovereign-wealth fund to bridge a deficit brought on by low petroleum prices.
Assets will drop to $475 billion at the end of this year, from an estimated $502 billion at the end of 2014, Fitch said in the report, adding that it expects them to rise again in 2017.
Alp Eke, a senior economist at National Bank of Abu Dhabi said Adia doesn’t announce the amount of money it manages but estimates range from $400 billion to $800 billion, making it the biggest sovereign wealth fund (SWF) in the region.
“According to London based Sovereign Wealth Center, ADIA manages approximately $770 billion, making it the second biggest SWF in the world after Norway’s Government Pension Fund,” Eke said.
“With careful investment strategies and with discipline, the institution managed to achieve annualised rate of return of 8.4% during the past 30 years.”
“Despite the slowdown in UAE’s economic growth, since Adia doesn’t invest in domestic assets and has recently started focusing on emerging market economies, Adia is expected to register higher returns.”
About 5,000 people from 60 different countries work for Adia, which is based on Abu Dhabi Corniche.