ADIA reduces assets held by external GPs

The sovereign wealth fund has further signalled its intent to handle more of its alternative investments directly.


The Abu Dhabi Investment Authority (ADIA), the preeminent sovereign wealth fund of the United Arab Emirates, has cut the amount of its assets managed by external managers by 5 percent.

ADIA revealed in its 2012 annual review published yesterday that approximately 75 percent of its assets are currently managed by external managers. The state fund previously had approximately 80 percent of its assets on the books of external managers.

ADIA, which is the largest institutional investor in private real estate in the world with $33.75 billion of investments, according to PERE’s Investor 30 ranking, has slowly been repositioning itself as more of a direct investor in the asset class.

The 37-year old state fund had previously heavily invested in property via external managers. However since 2009, when it hired global real estate head Bill Schwab to grow its Real Estate Department, ADIA elected to focus on taking more direct positions in its property transactions.

Last year, the Real Estate Department was combined with ADIA’s Infrastructure Department to form the combined Real Estate and Infrastructure Department but it still reports its targeted asset allocations separately.

For real estate ADIA has a target allocation of 5 percent to 10 percent of assets, while for infrastructure, the state fund has a target allocation of between 1 percent and 5 percent. For private equity ADIA targets between 2 percent to 8 percent of its assets allocated. 

In a further shift, ADIA also said it had approximately 55 percent of its assets invested in index-replicating strategies. This was down from 60 percent previously, signalling the state fund’s intent to recalibrate its focus to include more alternative assets.

These strategic shifts came as ADIA reported its 20-year annualised return for 2012 was 7.6 percent, up on the 6.9 percent it reported for 2011. Meanwhile, its 30-year annualised return was 8.2 percent, up marginally from 8.1 percent recorded in 2011.

ADIA has never revealed the value of its assets but according to the Sovereign Wealth Fund Institute, a sector body, they are valued at $627 billion.