The 1,200 or so employees working at the Abu Dhabi Investment Authority (ADIA) are among the most talented in the world. Eighty of them are full CFA (Chartered Financial Analyst) charter holders — one of the highest proportions of any company.
ADIA has achieved annualised returns of 8 per cent per annum over the last 30 years as of financial year end 2009. This is an impressively consistent margin for the world's largest sovereign wealth fund, which now has assets under management believed to be anywhere in the region of Dh1.7-Dh2.6 trillion.
Established in 1976, the fund operates an independent investment programme, functioning autonomously from the Government of Abu Dhabi. That said, ADIA does invest on the government's behalf and contributes in scenarios where there is a budget shortfall, although in practice such outflows are relatively infrequent. Funds are usually sourced from the Abu Dhabi National Oil Company (ADNOC) and other oil-related entities, as well as the government when there is a budget surplus (around 70 per cent of the surplus is thought to go to ADIA).
The majority of funds are allocated to equities in developed markets (around 35-45 per cent), government bonds account for 10-20 per cent, and 10-20 per cent is invested in emerging market equities. The rest is constituted of real estate, private equity, infrastructure and alternative investments. Cash holdings range from 0-10 per cent. Around 35-50 per cent is invested in North America, 25-30 per cent in Europe, 15-25 per cent in emerging markets, and 10-20 per cent in developed economies in Asia. Fluctuations in the value of these investments result in the variability of allocation percentages.
Unlike a lot of private equity and buyout funds, ADIA doesn't participate in managing the companies in which it invests, nor does it invest in the UAE. Neither is the Gulf region actively invested in, unless such an investment is part of a larger index — indexed funds make up a significant portion of ADIA's investments (around 60 per cent).
Also, unlike other government funds whose mandate allows them to buy large strategic stakes in public companies, ADIA's strategy is more geared toward a diversified portfolio with a large number of small (relative to the fund size) investments. For this reason, few of ADIA's individual transactions have been large enough to require public disclosure. Listed on the next two pages, are a selection of deals that have been disclosed in recent years.