UNITED ARAB EMIRATES - The Abu Dhabi Investment Authority (ADIA) said it returned 6.5% per annum for the past 20 years, providing its first peek into its investment operations since inception in 1976.
In its first annual report released yesterday, the often secretive sovereign wealth fund provided a breakdown of its target asset allocation in an attempt at increased transparency.
ADIA managing director Sheikh Ahmed bin Zayed Al Nehayan said: "With the publication of this, our first annual review, we aim to enhance understanding of ADIA in key areas such as governance, investment strategy, portfolio structure, our approach to risk and the lifeblood of our organisation, our people."
The annual report stopped short of revealing the fund's total assets, but a report by State Street in August 2009 estimated the total size of the portfolio at US$625bn. (Global Pensions; August 19, 2009)
ADIA said it targets between 35% and 45% in developed equities; between 10% and 20% each in emerging markets equities and government bonds; and between 5% and 10% each in credit, real estate and alternatives including hedge funds and balanced funds.
ADIA's investments in private equity can range from 2% to 8% and infrastructure and small-cap equity can reach 5% of total assets each. The manager can hold up to 10% in cash.
Up to 80% of the ADIA's total assets are managed by outside money managers in asset classes including equities, fixed income, foreign exchange, money markets, real estate, private equity and alternatives.
Geographically, ADIA can invest up to 50% in North America, 35% in Europe, 20% in developed Asia and 25% in emerging markets. The fund does not invest in the UAE or the Gulf region unless it is part of an index.
bin Zayed Al Nehayan said "considerable uncertainty" remains for the coming year.
He said: "Most pressing is the sustainability of the economic recovery as monetary and fiscal stimulus fades away. Indeed, the timing and nature of 'exit strategies,' will probably dominate the economic debate and outlook for quite some time."
"Given a backdrop of low nominal interest rates and significant public-sector debt, the next economic cycle will be very different from anything seen in the past 25 years," he added.
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