Abu Dhabi Investment Authority

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Quick Facts

Year Established
1976
Assets Under Management
$589 Billion
Source of Funds
Oil
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Office Details

Abu Dhabi Investment Authority

211 Corniche
P.O. Box 3600
Abu Dhabi
United Arab Emirates
Phone +971 (0)2 415 0000
Fax +971 (0)2 415 1000

London Office
1 Knightsbridge
London
SW1X 7LX
Tel: +44 (0)20 72596655

Fund Snapshot

In 1967 the government of Abu Dhabi set up the Financial Investments Board to invest the emirate’s newfound oil wealth, which was more than its small economy could absorb. The government replaced the board with the Abu Dhabi Investment Authority (ADIA) in 1976. In 1981, ADIA received an official mandate to invest for future generations and meet any redemption requests from whom the government, which it deems necessary to benefit the emirate. At first the fund relied on external investment banks to help oversee real estate, international fixed-income and equities investments, and managed domestic investments in-house.

ADIA has always been a low-profile, low-risk investor. Its caution is hard-baked into the culture of the fund, which launched at a time when the emir of Abu Dhabi, Sheikh Zayed bin-Sultan al-Nahyan, had concerns that other Arab nations might seek to access Abu Dhabi’s wealth as part of the popular ideology of Arab patrimony. ADIA tends to maintain a high degree of liquidity because the government can call upon it at any time to meet budget deficits. It is keen not to undermine its long-term savings objective by having to sell assets — and potentially incur losses — on short notice.

Although ADIA is often regarded as conservative, it has been innovative within the confines of its mandate. It started investing in hedge funds and managed futures in 1986 and was an early participant in private equity, establishing a dedicated team for the asset class in 1989. Since the 2008 financial crisis the fund has also experimented with portable-alpha strategies designed to help generate returns and maintain liquidity in its fixed-income portfolio.

In 1993, ADIA introduced its so-called neutral benchmark, a strategic portfolio allocation that has evolved to include new asset classes, most notably infrastructure and small-cap equities.

ADIA increased the amount of its portfolio that it manages inhouse to 25 percent in 2012, from 20 percent in 2011. However, the majority of its portfolio is managed by external managers running index-tracking strategies in publicly traded securities such as equities and bonds. ADIA also assigns some active mandates to external managers, but increasingly prefers to insource alpha generation and emerging-markets investments. Since 2011 it has also increased the amount of money that its internal teams run in a range of illiquid investments, including real estate, infrastructure and private equity. As a result of the fund’s increased internal investment activities, in 2013 ADIA employed 1,500 staff, an increase of almost 20 percent. 
 

Asset Allocation by Asset Classes
Developed equities 32 -42%
Emerging-market equities 10 - 20
Small-cap equities 1 - 5
Government bonds 10 - 20
Credit 5 - 10
Alternatives (hedge funds and managed futures) 5 - 10
Real estate 5 - 10
Private equity 2 - 8
Infrastructure 1 - 5
Cash 0 - 10

Asset Allocation by Geography
North America 35 - 50%
Europe 20 - 35
Developed Asia 10 - 20
Emerging markets 15 - 25

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