The Abu Dhabi Investment Authority (ADIA) issued its 2017 results. ADIA’s 20-year return bumped up to 6.5% from 6.2% in 2016. Externally-managed assets dropped to 55% from 65% in 2014. 50% of the sovereign fund’s assets are managed by index-replicating strategies, including smart beta strategies. In the 2017 ADIA Review, the report states, “Trying to time markets is extremely difficult, and dangerous, for large and diversified global investors. A more practical approach is to view cycles as opportunities, and to prepare strategies that limit drawdowns and provide sufficient available capital to take advantage of lower asset prices when markets turn lower.”
ADIA’s external equities department has an active focus. The whole external equities department maintains a single global equities pool with a cadre of external fund managers.
ADIA formed the Strategy and Planning Department (SPD), in a move to streamline the sovereign wealth fund’s organization, while reducing complexity, something other large asset owners such as CalPERS have been attempting to do since 2010. SPD is also working on a Risk-Return project to develop allocation of risk in investment departments.
ADIA also changed the organization of its private equity group as the fund wants to make more principal investments. ADIA switched from a buyout-growth-VC product structure to a sector based on five key sectors: Financial Services, Healthcare, Industrials, Technology and Consumer.
Banking behemoth J.P. Morgan Chase disclosed its own digital currency called JPM Coin. The digital token will be used to settle payments between clients. JPM Coin will be backed by physical U.S. dollars and be based off Quorum. Quorum is J.P. Morgan’s private Ethereum-based chain. JPM Coin plans to compete with Ripple, which created XRP, another digital currency that is used for settlements. Ripple’s main target market is cross-border payments and remittances.
The Central Bank of the United Arab Emirates and the Saudi Arabian Monetary Authority have unveiled their plans for Aber, an interbank digital currency. Both banks have indicated that Aber will be limited to financial settlements using distributed ledger technologies. It will be rolled out on a probational basis, and used by select banks within the two countries. A date for rollout has not yet been declared. A joint statement hinted at a broader application of the currency in the days ahead. If “no technical obstacles are encountered, economic and legal requirements for future uses will be considered.” Blockchains and Distributed Ledgers technologies will be employed. The plan is for ‘Proof-of-Concept’ testing, which involves studying and fully comprehending the ways modern technologies can achieve practical applications. The digital currency has the potential to become a reserve system for central payments.
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La Française and Canada Pension Plan Investment Board (CPPIB) formed a strategic partnership for the launch of a real estate investment and development vehicle: Société Foncière et Immobilière du Grand Paris. The joint venture between CPPIB (80%) and Caisse Fédérale du Crédit Mutuel Nord Europe (CMNE) (20%), La Française’s shareholder, will invest in major real estate projects linked to the Grand Paris infrastructure in the Greater Paris area. The parties will initially allocate €387.5 million in equity to the venture. The partnership will target regeneration and infrastructure-led investments.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
Øystein Olsen, the Governor of Norges Bank, which oversees the Norway Government Pension Fund Global (GPFG), voiced his opinion on the Norwegian government’s plans to alter the rules that regulates the country’s SWF withdrawal rules in certain circumstances. The coalition government led by Norwegian Prime Minister Erna Solberg wants to relax the limits on SWF withdrawals in specific cases. Norway’s government seeks to raid the fund to pay for the replacement of four major state buildings impacted by a terrorist attack and a crashed Royal Norwegian Navy frigate (KNM Helge Ingstad).
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