Abu Dhabi Investment Authority: History and Investments

Abu Dhabi Investment Authority Review

Abu Dhabi Investment Authority (also known as ADIA), is a sovereign wealth fund. This sovereign wealth is owned by Emirate Of Abu Dhabi in the popular oil rich United Arab Emirate. And, The Abu Dhabi Investment Authority was said to be founded for the purpose of investing funds on behalf of the Emirate of Abu Dhabi’s government.

The Abu Dhabi Investment Authority serves superb purposes. Amongst the numerous lots, the firm manages the Emirate’s excess oil reserves (which are actually estimated to be as much as $500 billion). And yes, as expected, its portfolio grows at an annual rate of about 10% compounded.

However, The Abu Dhabi Investment Authority is said to have never published how much it has in assets. Nevertheless, estimates have been between $800 billion to approximately $875 billion USD. In fact, The Sovereign Wealth Fund Institute even put the figure at US$773 billion.

The Abu Dhabi Investment Authority: The History.

In year 1967, it was said that the popular Abu Dhabi emirate created the Financial Investments Board. This was said to operate within its Department of Finance (and was also responsible for managing the Emirate’s excess oil revenue).

Nevertheless, in 1976, the founding President of the United Arab Emirate and leader of Abu Dhabi, Zayed bin Sultan Al Nahyan, made the decision of creating the Abu Dhabi Investment Authority instead. He seeks separating it from the government as an arms-length organization with its own management.

The goal, however, is to invest the Abu Dhabi government’s surpluses across various asset classes (and of course, with low risk). At the time it was actually novel for a government to invest its reserves in anything other than gold (or short-term) credit). And today, it is said and believed that investment in short-term paper remains the strategy for the vast majority of countries.

The Investments

Actually, the Abu Dhabi Investment Authority manages a substantial amount of capital. And, in fact, it is one of the world’s largest investment funds. Now, due to its size, the fund has been influential in international finance.

The Abu Dhabi Investment Authority in 2008, co-chaired the International Working Group (of 26 superb sovereign wealth funds that actually produced what is known as the Generally Accepted Principles and Practices of Sovereign wealth funds). And in case you don’t know, those principles were created to demonstrate to home and recipient countries and even the international financial markets that sovereign wealth funds had robust and large internal frameworks and governance practices (and also that their investments were made only on an economic and financial basis).

Then, 20-year and 30-year annualized rates of return for The Abu Dhabi Investment Authority portfolio were 7.6% and 8.1 respectively (that is as of 31 December 2010). And sure, this firm is really one of the largest sovereign wealth funds in the world as a whole. Yeah. That’s the fact. Today, reports emerged that Abu Dhabi Investment Authority invests in all the international market (equities, infrastructure, real estate, fixed income and treasury, private equity and alternatives- hedge funds and commodity trading advisers).

ADIA is known to be a major purchaser of U.S institutional real estate through various sub-entities. And also, it often buys partial interest ownerships with leading real estate managers.

Then, on the 27th of May in 2013, the Abu Dhabi Investment Authority published it 2012 Review. It was with an overview of its activities during the past year and also an explanation of its approach to investing (strategy, governance, and risk management).

Abu Dhabi Investment Authority: Global Portfolio Broken Into Sub-funds

And in fact, the Abu Dhabi Investment Authority’s global portfolio is even broken down into sub-funds that are said to be covering a specific asset class. Yeah, each assets class even has its own fund managers with in-house analysts covering it. Almost all asset class in managed both internally and externally.

Reports made us understand that, overall between 70% and 80% of the organization’s assets are managed outside (and that over the last few year the funds has become more indexed which given its unique asset liability structure can be said to be perplexing. It is also known to often buy partial interest ownerships with different leading real estate managers.

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