Abu Dhabi Investment Authority - Investments

Investments

ADIA manages a substantial amount of capital, and is one of the world's larger investment funds. Due to its size, the fund has been influential in international finance. In 2008, ADIA co-chaired the International Working Group of 26 sovereign wealth funds that produced the "Generally Accepted Principles and Practices of sovereign wealth funds" (known as the Santiago Principles). These principles were created to demonstrate to home and recipient countries and the international financial markets that sovereign wealth funds had robust internal frameworks and governance practices and that their investments were made only on an economic and financial basis.

20-year and 30-year annualized rates of return for the ADIA portfolio were 7.6% and 8.1%, respectively, as of December 31, 2010. ADIA is the largest Sovereign Wealth Fund in the world.

Today ADIA invests in all the international markets – equities, fixed income and treasury, infrastructure, real estate, private equity and alternatives (hedge funds and commodity trading advisers – CTAs). ADIA's global portfolio is broken down into sub-funds covering a specific asset class. Each asset class has its own fund managers and in-house analysts covering it. Almost every asset class is managed both internally and externally. Overall between 70% and 80% of the organization’s assets are managed outside, and over the last few years the fund has become more indexed which given its unique asset libaility structure is somewhat perplexing.

Many of ADIA's investments have decreased substantially since investments were made at market peaks in 2007 and 2008. The $7 billion investment in Citigroup has lost approximately 90% of its value as of Nov 26 2009, 2 years after it acquired a sizable stake in the bank. Its investments in global real-estate at the market top in 2008 have also decreased substantially in value. Though it talks of its long term success in generating returns, the fact that its moved closer to the index and manages most of its funds through external third party fund managers shows that its tolerance for risk taking is greatly diminished over the years. Insiders state that the culture remains secretive, bureaucratic and patriarchial.

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