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Euromoney, December 8 2020

In the final month of 2020, the Abu Dhabi Investment Authority (Adia) has just got around to producing its review for 2019.

It is characteristically light on data: not only, like many sovereign wealth fund annual reviews, is it chronically out of date in that it predates the Covid-19 pandemic. It also doesn’t tell us how much money Adia manages. (It never does, and probably never will.)

But that’s just how it is in the Gulf: Adia at least reveals more than its peers in Saudi Arabia and Qatar, including, for example, the asset allocation ranges it invests within over the long term. And it provides only a few nuggets of wisdom about what this vast fund, certainly one of the largest in the world, does with its money.

The headline data is the return figure, which, like peers such as the Government of Singapore Investment Corporation, is reported only on a long-term basis: 4.8% annually over 20 years, and 6.6% over 30 years.

Again, like GIC, it is curious how an event two decades ago can make returns look weak today, in this case the run-up to the tech stock crash slipping out of the 20-year figures.

The other key figures that the fund discloses are the proportion that is managed actively versus passively (55/45), and the proportion that is managed internally versus externally (45/55).

Both are the same as last year; the shifts towards passive management and internal capability happened some years ago, and the fund seems to be happy with its current divisions of labour and risk.

Words, not numbers

So, not much to be gained from the numbers. What can we find in the words?

One point of note is an apparently growing interest in Africa.

The report refers more than once to an Africa Investment Summit it hosted in 2019 to explore opportunities for long-term investment on the continent.

Adia still sees China and India as key drivers of global growth, the report says, “although we recognize the importance of remaining open-minded about possible new sources of return. With an abundance of natural resources and young, growing and increasingly educated populations, African countries are among those offering the greatest potential for long-term investors.”

It would be a surprise to see heavy investment from Adia into Africa though; the opportunity is unpredictable, fragmented and high risk.

The fund certainly has enough in-house expertise to find the right assets, however. Adia now has 1,700 employees, a very high number for a sovereign wealth fund.

Read the rest of the article here

Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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