Abu Dhabi Investment Authority
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| Type | Sovereign wealth fund |
|---|---|
| Industry | Institutional investor |
| Founded | 1976 |
| Headquarters | Abu Dhabi, United Arab Emirates |
| Key people |
Sheikh Khalifa bin Zayed Al Nahyan, Chairman Sheikh Hamed bin Zayed Al Nahyan, Managing Director |
| Total assets | Unpublished (estimated $300 - $875 billion)[1] |
| Website | www.adia.ae |
The Abu Dhabi Investment Authority (ADIA) is a sovereign wealth fund owned by Abu Dhabi, United Arab Emirates founded for the purpose of investing funds on behalf of the Government of Abu Dhabi.
ADIA has never published how much it has in assets but estimates have been between $300 billion to approximately $875 billion USD.[1] The Sovereign Wealth Fund Institute puts the figure at $627 billion USD[citation needed].
Due to the nature of its investments ADIA does not adhere to the Islamic Sharia.[2]
Contents |
[edit] History
In 1967, Abu Dhabi emirate created the Financial Investments Board which operated within its Department of Finance and was responsible for managing the Emirate's excess oil revenues. However, in 1976, Sheikh Zayed bin Sultan Al Nahyan, the founding President of the United Arab Emirates and leader of Abu Dhabi made the decision to create the Abu Dhabi Investment Authority instead and separate it from the government as an arms-length organization with its own management.[3] The goal was to invest the Abu Dhabi government’s surpluses across various asset classes, with low risk. At the time it was novel for a government to invest its reserves in anything other than gold or short-term credit. Even today, investment in short-term paper remains the strategy for the vast majority of countries.
[edit] 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.[4]
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.[5] 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. Its tolerance for risk taking is greatly diminished over the years. Insiders state that the culture remains secretive, bureaucratic and patriarchial.
[edit] Current Board of Directors
- HH Sheikh Khalifa bin Zayed Al Nahyan, Chairman (President of UAE and ruler of Abu Dhabi)
- HH Sheikh Sultan bin Zayed Al Nahyan
- HH Sheikh Mohammed bin Zayed Al Nahyan (Crown Prince of Abu Dhabi)
- HH Sheikh Hamid bin Zayed Al Nahyan Managing Director
- HH Sheikh Mansour bin Zayed Al Nahyan
- HH Sheikh Mohammed bin Khalifa bin Zayed Al Nahyan
- HE Mohammed Habroush Al Suwaidi
- HE Dr. Jua’an Salim Al Dhaheri
- HE Hamad Mohammed Al Hurr Al Suwaidi
- HE Khalil Mohamed Foulathi
[edit] References
- ^ a b Sovereign-wealth funds | Asset-backed insecurity | Economist.com
- ^ http://www.middle-east-online.com/english/business/?id=38299
- ^ "ADIA Review 2009". http://www.adia.ae/en/pr/Annual_Review_Website2.pdf.
- ^ "Generally Accepted Principles and Practices (GAPP)—Santiago Principles". http://www.iwg-swf.org/pubs/gapplist.htm.
- ^ "ADIA Review 2010". http://www.adia.ae/En/pr/Annual_Review_Website_2010.pdf.
