News Column

Adia sees improved returns as global economic conditions improve

July 1, 2014

Babu DasAugustine Banking Editor

Dubai -- Abu Dhabi Investment Authority (Adia), one of the world's biggest sovereign wealth funds (SWF) in the world on Tuesday said its 20-year and 30-year annualised rates of return for its portfolio were 7.2 per cent and 8.3 per cent respectively, as of December 31, 2013.

Adia's 30-year annualised return edged up to 8.3 per cent from 8.2 per cent in as its 20-year annualised rate of return for 2013 was marginally down from 7.6 per cent in 2012.

Looking forward, Adia expects global economic growth will increasingly be sourced from emerging economies and the developed world will gradually and steadily recover from the damage caused by the financial crisis.

"Despite short-term setbacks, emerging markets, and particularly China, are likely to play a much greater role in this global growth cycle than ever before. For global investors, this of course raises the profile of economic management in these countries," said Shaikh Hamed bin Zayed Al Nahyan, managing director of Adia.

According to Adia, beyond China, the emerging markets are expected to become far more diverse, and less easy to classify. Meanwhile, the developed world are expected to remain critically important to global investors as it is still the primary source of high-quality, investable financial assets, and continues to set the agenda for economic policies and regulation.

The Abu Dhabi headquartered SWF has assets estimated at $773 billion by the Sovereign Wealth Fund Institute. Its performance is measured based on underlying audited financial data and calculated on a time-weighted return basis.

Approximately 75 per cent of Adia's assets are managed by external fund managers whose activities are subject to careful oversight and around 55 per cent of its assets are invested in index-replicating strategies.

In its 2013 review on Tuesday Adia said there are growing opportunities in asset classes such as real estate, infrastructure, private equity and alternatives investments in 2014.

In 2013 Adia's investment portfolio remained unchanged 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.

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Source: Gulf News (United Arab Emirates)

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