Abu Dhabi sovereign fund coughs up: first ever review published

With uncharacteristic fanfare, the big Abu Dhabi sovereign wealth fund has provided the first insight into its workings, illustrating an international outlook and an appetite for a sophisticated asset allocation strategy. The fund published its first ever “annual review” this week.

The Abu Dhabi Investment Authority (ADIA), which was established in 1976 as a breakaway fund independent of the Emirates Government, has provided for the first time a blueprint for its operations which, while short on financial detail, at least demonstrates a strong governance structure and dedication to the latest thinking on investment management.

The publication of the review coincided this week with the launch of a new website for the organisation, which incorporates much of the information in the review. It shows the governance structure, asset allocation and portfolio construction, as well as administration overview for the fund.

The review stops short, however, of providing financial details such as size of total assets (estimates say it’s about $875 billion), precise asset allocation or external funds managers and other service providers.
Nevertheless, the review represents a big step forward in transparency which is likely to be followed by other formerly secretive sovereign wealth funds, such as those of Singapore.

ADIA agreed several years ago to co-chair the International Working Group of Sovereign Wealth Funds, which came together in 2008. The other co-chair was the IMF. Subsequent to that, the group agreed to what is known as the Santiago Principles, which represent a voluntary code of behaviour and disclosure for the 24 member funds.

AIDA formed, for the first time, a media and communications department, and started a program of greater engagement with other large investors around the world.

The review shows that the fund has had above-average performance, for its risk profile, over a long period. The 30-year annualised return (to December last) is 8.0 per cent and the 20-year return is 6.5 per cent. Given that most of the fund’s investments are international, the returns are impressive.

Sheikh Ahmed bin Zayed al Nehayan, the ADIA managing director, said this week that the publication of the review and the new website represented another important milestone in the process of building strong and trusted relationships with governments, regulators and business partners around the world.

The full review can be seen under ‘media and resources’ at: www.adia.ae

Photo: Sheikh Ahmed bin Zayed al Nahyan, managing director of Abu Dhabi Investment Authority