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Abu Dhabi’s Sovereign Wealth Giant Shifts Gears



Sheikh Hamed bin Zayed Al Nahyan, ADIA's Managing Director

Sheikh Hamed bin Zayed Al Nahyan, ADIA’s Managing Director

The Abu Dhabi Investment Authority (ADIA) achieved significant breakthroughs for 2012. Annualized returns for 2012, 20-year return (percent annualized) were 7.6%. For 2011, the 20-year return was 6.9%. A positive performance for 2012, ADIA profited from a hard weight in public equities, akin to Norway’s GPFG gain in asset value. Achieved significant breakthroughs in 2012 include the movement toward in-house management in alternatives and a shift to emerging markets.

ADIA’s Investment in Human Capital
Globally, elephantine public investors constantly seek ways to minimize fees, hence the increased interest of in-house investment management. Private equity, real estate and infrastructure are growing assets classes for ADIA given the low-yield environment. These alternative asset classes are costlier to access compared to bonds or public equities. One way to lower fees in alternatives is to take a direct approach to investing.

ADIA has committed substantial resources to recruit industry professionals to Abu Dhabi.

Our estimate of US$627 billion for the asset size of ADIA relates to the employee size of the organization. In 2012, there were around 1,400 employees working for ADIA from 1,275 in 2011. Approximately 75% of assets are managed by external managers – a decreasing percentage from previous years. In 2011, 80% of assets were managed externally. Abu Dhabi’s sovereign wealth fund has taken steps; they have built up capabilities in their internal equities team.

ADIA has worked aggressively to attract talent to Abu Dhabi, paying compensation above what other Western sovereign wealth funds and pensions pay. Other Gulf state-owned investors like the Qatar Investment Authority are following a similar route by enhancing their investment teams to purchase assets or companies directly, rather through funds.

Notable ADIA hires include Marc Keirstead as chief financial officer of ADIA’s private equity department. He came onboard in October 2012 from the Canada Pension Plan Investment Board. Another key hire was John McCarthy who serves as ADIA’s global head of infrastructure. John McCarthy joins ADIA from Deutsche Bank where he was managing director and global head of RREEF Infrastructure since 2005.

ADIA not only focuses on recruiting overseas talent, they aim to beef up talent within their nation. ADIA launched “Year One Academy” which aims to provide UAE nationals opportunities to receive training and experience in all asset classes at ADIA.

Shift to Emerging Markets[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Trump’s First Year Cements M&A Boom, Will it Last?



Despite a recent downdraft in the stock market, economic signs suggest that the nation has prospered since U.S. President Donald Trump was elected. His first year was marked by mega mergers and acquisitions, and renewed hopes for deregulation and tax relief. M&A deals totaled US$ 1.2 trillion in the year since Trump was elected in a stunning upset, which compelled former U.S. Secretary of State Hillary Clinton to pen the book, “What Happened.” The total number of deals also set a record. In sum, nearly 13,000 deals have been made between the election and the end of the 2017 calendar year. Business sentiment was clearly buoyed by Trump’s election, with investors and organizations cheering the business-friendly environment to come. Unemployment dropped to a low of 4.1% in 2017, before further falling to 3.7% in 2018. This has been described as “full employment.” The unemployment rate will only fall to a certain level because there are always employees looking for something new and leaving jobs they hold. The stock market has also done well under Trump. Not since the 1960’s was volatility as low as it was during the early part of his presidency. Even with the swoon over the last several weeks, the market is still up substantially since Trump’s election. Despite consistent pessimistic headlines on major financial news sites, Amazon is still moving ahead with its massive #2 headquarters, while Google is planning a gigantic development in his core home of Mountain View, California.

Yet, controversy swirls as former U.S. President Barack Obama declared, “When you hear how great the economy is doing right now, let’s just remember when this recovery started.” [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Ayatollah Khamenei Orders Central Bank Governor to Increase Value of the Rial



Iran Supreme Leader Ayatollah Ali Hosseini Khamenei requested the Central Bank of Iran to boost the value of the Iranian rial, according to the central bank’s governor. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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SWFI First Read, December 8, 2018



UBS Trumbull Property Fund Faces Redemption, MassPRIM Benefits

Massachusetts Pension Reserves Investment Management Board (Mass PRIM) Allianz Real Estate, and Beacon Capital Partners acquired the Exchange Place skyscraper in Boston has been sold for US$ 845 million from UBS Realty Investors. UBS Realty, part of UBS Group AG, acquired the 53 State Street office tower in December 2011 from Brookfield Office Properties for US$ 610 million. Tenants of the property include Morgan Stanley, The Boston Globe, Hill Holliday, and Nixon Peabody. The property was a major holding of the open-ended fund called UBS Trumbull Property Fund.

MassPRIM will own 49% of the property.

Tower Hamlets Pension Fund Awards Equity Protection Mandate to Schroders

In September 2018, Tower Hamlets Pension Fund awarded Schroders with a mandate for a risk management solution for £700 million in an equity protection strategy. This covers about half of the fund’s portfolio of £1.4 billion. The pension fund’s consultant is Mercer.

Ebola Spreads in the Congo

The second-largest Ebola outbreak in world history has spread to Butembo, a city in eastern Congo with more than 1 million inhabitants.

NZSF Board Member Joins Board of NZX

The NZX (New Zealand Stock Exchange) board of directors named Lindsay Wright as lead independent director. She is Deputy Chair of the Board of the Guardians of the New Zealand Superannuation Fund.

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