Abu Dhabi: The Abu Dhabi Investment Authority (ADIA), the world’s largest sovereign wealth fund by assets under management, said today in a review of its 2011 performance that up to 45 per cent of its total portfolio has been invested in developed market equities, while up to 20 per cent is deployed in emerging market equities, and government bonds.

Real estate assets comprised up to 10 per cent of ADIA’s portfolio, private equity formed 8 per cent, and infrastructure made up 8 per cent. Credit, alternative investments and cash were each capped at 10 per cent in the ADIA portfolio. Investments in small cap equities were capped at 5 per cent, ADIA said.

“That’s our benchmark for the total portfolio and the range for 2011 was the same as 2010,” an ADIA spokeperson told Gulf News by telephone.

North America and Europe accounted for the biggest chunk of ADIA’s investments, with about 60 to 85 per cent going to the regions.

The ADIA Review provides a broad overview of its activities in 2011, including analysis of market conditions across the many asset classes in which it invests in.

Powerful headwinds

“2011 was a year in which financial markets and global economies once again proved their resilience in the face of powerful headwinds. While buffeted by considerable volatility, and a series of unforeseen events, including the tragic earthquake and tsunami in Japan, the year drew to a close with a renewed sense of optimism that the most serious risks may finally be behind us,” Shaikh Hamed Bin Zayed Al Nahyan, ADIA’s managing director, said.

He added: “Despite facing undoubted short-term risks, the global economy offers many exciting and important opportunities. Economic advances require the input of capital through a range of vehicles, from private equity and direct investments to public equities, hedge funds and also government bonds. As a long-term investor, we see ourselves as providers of this necessary capital, with the advantage of patience and the ability to ride out dips in the economic cycle.”

ADIA said with the current level of government bond yields, the valuation of global equities remains attractive for long-term investors in general and especially in the emerging market space.

“Indeed, emerging markets have already outperformed their developed peers over the past decade and we expect this trend to continue. As inflation crests, we expect emerging market central banks such as those in China and India to continue with their counter-cyclical monetary policies, which will in turn support some expansion in valuation multiples, assuming consensus top-line growth expectations continue to be realised,” it added.

Risk aversion

ADIA, whose assets range from Citigroup bonds to a stake in Britain’s Gatwick airport, said high volatility in emerging market stocks had more to do with increased risk aversion among investors than fundamental concerns.

“Looking forward, it is likely that such volatility will decline over time as investors gain confidence in the ability of emerging markets to manage the various challenges they face and begin to focus more on economic fundamentals,” the fund said in its latest review.

ADIA returned 6.9 per cent on an annualised basis over a 20-year period, as of December 31, 2011, a slight drop from the 7.6 per cent it posted in 2010. On the same basis, the fund returned 8.1 per cent over a 30-year period, similar to 2010.


In 2011, ADIA restructured its external equities department, separating indexed funds from active funds as part of a more focused strategy.

It merged what had been four departments into one for the active funds, while a new indexed funds department is also being set up. An internal restructuring was undertaken last July.

ADIA does not disclose its assets but analysts estimate the value of assets under its management range between $400 billion to $800 billion.