STOCK ADIA Abu Dhabi Investment Authority
Abu Dhabi Investment Authority building. ADIA sees sees technology and climate change as key investment areas for its post-COVID-19 strategy. Image Credit: Virendra Saklani/Gulf News

Dubai: Abu Dhabi Investment Authority (ADIA), the UAE’s biggest sovereign wealth fund achieved stronger rates of return despite the COVID-19 crisis impacting the global economy according to its 2020 annual review.

While the COVID crisis impacted all aspects of life across the world, ADIA said it remained focused on its mission.

Throughout the crisis, ADIA remained focused on its mission of prudently managing capital on behalf of Abu Dhabi. To do so, it was necessary for ADIA to react on several fronts.

- Sheikh Hamed bin Zayed al-Nahyan, Managing Director of ADIA
Adia portfolio
Adia portfolio Image Credit: Supplied

Asset allocation

ADIA’s investments in private equity and Infrastructure have grown over a number of years and this has led to increases in the allocation bands for both asset classes:

  • Private equity has increased from 2 per cent - 8 per cent band to 5 per cent – 10 per cent band
  • Infrastructure has increased from 1 per cent – 5 per cent range to 2 per cent –7 per cent
  • On a geographical basis, the band for Developed Asia has reduced from 10 per cent –20 per cent to 5 per cent – 15 per cent

“This trade-off is at the centre of ADIA’s investment strategy, and we were able to efficiently navigate market turmoil to position ourselves for the rebound,” Sheikh Hamed said

ADIA is considering the potential impact of climate change on portfolios, including the formal assessment of climate change factors for all new investments. The Fund said in its annual review that it has committed capital to a number of opportunities set to benefit from the move to a lower-carbon economy.

Areas of focus

Major areas of investment focus for the fund include technology, healthcare, renewable energy, and real estate sub-sectors such as logistics and data centres.

ADIA increased its exposure to renewable energy and through its infrastructure investments it now has an indirect interest in assets with a renewable capacity of more than 20 gigawatts.

On the equities side, its Indexed Fund Department introduced a climate change portfolio last year.

As of December 31, 2020, ADIA’s 20-year and 30-year annualised rates of return, were 6 per cent and 7.2 per cent respectively, compared to 4.8 per cent and 6.6 per cent in 2019.

The Fund attributed these increases to both the years falling out of the calculations as well as performance in 2020, underlining our preference for focusing on long term trends. ADIA also took the opportunity in 2020 to update certain ranges within its long term strategy portfolio, reflecting changes that have been underway for some time.