News Column

Abu Dhabi fund sees opportunities in infrastructure, alternative investments

July 1, 2014

Babu Das Augustine Banking Editor

Dubai: Abu Dhabi Investment Authority (Adia), which published its annual 2013 review on Tuesday said there are growing opportunities in asset classes such as real estate, infrastructure, private equity and alternatives investments in 2014.

The 38-year-old sovereign wealth fund's investment portfolio remained unchanged in 2013 with developed markets equities at 32 per cent to 42 per cent of total allocations and emerging markets equities at 10 per cent to 20 per cent.

In terms of geographies North America represents the largest share of asset allocation from 35 per cent to 50 per cent of investments, Europe 20 per cent to 35 per cent, emerging markets 15 per cent to 25 per cent and developed Asian markets 10 per cent to 20 per cent.

In equities, last year, additional funds were allocated to its core European, Emerging Europe and South Africa, and Equity Opportunities portfolios.

Last year, Adia received approval from the Chinese market regulator to increase its allocation to Chinese A shares under the Qualified Foreign Institutional Investor scheme from $500 million to $1 billion.

On the fixed income front Adia invests in global government bonds, global inflation linked bonds, emerging market bonds, global investment-grade credit and non-investment-grade credit. Last year despite the continuation of bond buying programme in the US and easy money policy across many countries, yields rose in global bond markets and broad market indexes recorded negative total returns for the first time since 1994.

On the bond investment front Adia said it expanded the investment universe within the guidelines across various mandates to enhance alpha opportunities in a risk-controlled manner. There was also a focus on exploiting opportunities in the stressed credit space as banks across Europe deleveraged.

In other asset classes, Adia said its real estate team, which manages 5 per cent to 10 per cent of its assets, was "broadening its scope toward opportunities" in Brazil and Mexico among other developing countries in the Americas.

The authority, which employs more than 1,500 people from 60 nationalities, also invests in small capitalisation equities, fixed income, infrastructure, hedge funds and private equity.

In 2014, Adia plans to expand its infrastructure team while improving its risk management capabilities, it said.

"We have built out our investment teams in the illiquid space, such as real estate, infrastructure and, more recently, private equity, adding considerable expertise across geographies and asset specialisation," said Shaikh Hamed Bin Zayed Al Nahyan, managing director of Adia.

"These efforts have strengthened Adia's ability to take a holistic, global view of its investments, while also allowing us to target more specific opportunities with attractive return characteristics."

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Source: Gulf News (United Arab Emirates)

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