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ADIA’s 20-Year Return from 2014 Creeps Upward

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The Gulf region is home to a number of massive sovereign funds, due to its abundance of oil and natural gas resources. The Abu Dhabi Investment Authority (ADIA) published its 2014 annual review, documenting its investment strategy and external manager selection process. ADIA’s 20-year return for 2014 crept up to 7.4% from 7.2% in December 2013. There were no changes in its targeted allocation ranges both in asset classes and geography. The proportion of ADIA’s assets managed by external fund managers dropped to 65% from 75%. This is a reflection of ADIA’s push to manage a greater proportion of assets in-house, especially in areas such as real estate and infrastructure.

View the Asset Allocation of the Abu Dhabi Investment Authority

Despite setbacks in 2014 emerging market equity performance, ADIA still believes in the long-term viability of these markets. In the 2014 annual review, ADIA Managing Director Hamed bin Zayed Al Nahyan Managing Director penned, “The most important of these, and one we have discussed in previous years, is the growing importance of emerging market economies. Despite evident stresses that appeared last year in several of these countries, we see grounds for optimism: China’s government continues to improve its economic governance and prepare for a wider role in global capital markets. New leadership in India has signalled a renewed commitment to reform and modernisation of the economy.”

ADIA’s New 2014 Mandates

In 2014, ADIA formed two new mandates in equities. The first mandate was the creation of an internal U.S. equities department. In May, ADIA hired John Pandtle to the newly-formed role of head of the U.S. within its internal equities department. The other is a department called high conviction. Some characteristics of high conviction strategies are: less portfolio turnover, concentrated portfolio and high active share (holdings are different from benchmark). In addition, ADIA made modifications to its operating model, giving enhanced flexibility for external managers to pursue alpha that may not easily be captured within the structure of ADIA’s strategic neutral benchmark, or policy portfolio. This new model is for skilled external managers who seek outperformance within approved limits.

Follow the Money – Episode 48

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This long-form podcast was recorded on December 11, 2018. Michael Maduell dissects the latest geopolitical trends that can impact institutional investors such as pensions, sovereign wealth funds, and endowments. Maduell lends his opinion on the lawsuit of Neiman Marcus and bumps in the road for augmented reality.

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CONTENTS
1:15 Huawei, Canada, Brexit, and Macron Headache
6:30 Sovereign Wealth Fund Asset Allocation
9:58 India Gets a New Central Bank Governor
13:26 Pensions Go Bust on U.S. Retailers
17:04 Augmented Reality and Sovereign Funds
22:00 Former CalPERS CIO Goes to Morgan Stanley Investment Management
24:30 Oman Investment Fund Goes on Defense in Public Markets
25:00 Japanese Scandals and Opportunities

EPISODE 48

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The views in this media are expressed by Michael Maduell and other participants and are not reflective of the Sovereign Wealth Fund Institute (SWFI).

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Danica Pensions Sells Danica Pension Sweden

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Danica Pension sold Danske Pension Försikringsaktiebolag (publ) (also known as Danica Pension Sweden) to a group of investors for around 2.6 billion SEK. Danica Pension is part of Danske Bank A/S. Of the total amount, 2.3 billion SEK is being paid in cash, while the rest is in the form of a debt instrument from Danica Pension.

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Stephen Gilmore Named CIO of New Zealand Superannuation Fund

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The Guardians of New Zealand Superannuation appointed Stephen Gilmore as chief investment officer. Previously, Gilmore was Chief Investment Strategist at Australia’s Future Fund – holding a series of positions between 2009 and 2018. In a press release, NZSF CEO Matt Whineray said, “We are delighted to have been able to attract a global investment leader of Stephen’s calibre to the Guardians. The NZ Super Fund is expected to grow strongly over the next few years and Stephen’s experience at the Future Fund, one of the world’s leading sovereign wealth funds, will be invaluable.”

Gilmore’s appointment is effective late February 2019.

Gilmore also had roles at Morgan Stanley, Banque AIG, the International Monetary Fund (IMF), and Chase Manhattan Bank.

Image photo is provided courtesy of the New Zealand Superannuation Fund.

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