Abu Dhabi Investment Authority
Encyclopedia
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 $650 billion to approximately $875 billion USD. The Sovereign Wealth Fund Institute puts the figure at $627 billion USD.
Due to the nature of its investments ADIA does not adhere to the Islamic Sharia.
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. 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 .
It manages the emirate’s excess oil revenues, estimated to be as much as $1 trillion. 20-year and 30-year annualized rates of return for the ADIA portfolio were 6.5% and 8%, respectively, as of December 31, 2009. ADIA is the largest SWF 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.
Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
owned by Abu Dhabi
Abu Dhabi
Abu Dhabi , literally Father of Gazelle, is the capital and the second largest city of the United Arab Emirates in terms of population and the largest of the seven member emirates of the United Arab Emirates. Abu Dhabi lies on a T-shaped island jutting into the Persian Gulf from the central western...
, United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
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 $650 billion to approximately $875 billion USD. The Sovereign Wealth Fund Institute puts the figure at $627 billion USD.
Due to the nature of its investments ADIA does not adhere to the Islamic Sharia.
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 EmiratesUnited Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
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. 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
Official gold reserves
A gold reserve is the gold held by a central bank or nation intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders , or trading peers, or to secure a currency....
or short-term credit. Even today, investment in short-term paper remains the strategy for the vast majority of countries .
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.It manages the emirate’s excess oil revenues, estimated to be as much as $1 trillion. 20-year and 30-year annualized rates of return for the ADIA portfolio were 6.5% and 8%, respectively, as of December 31, 2009. ADIA is the largest SWF 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.
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 NahyanMohammed bin Zayed Al NahyanMohammed bin Zayed bin Sultan Al Nahyan is the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces .-Political and business career:...
(Crown Prince of Abu Dhabi) - HH Sheikh Hamid bin Zayed Al Nahyan Managing Director
- HH Sheikh Mansour bin Zayed Al NahyanMansour bin Zayed Al NahyanHH Sheikh Mansour bin Zayed bin Sultan Al Nahyan is a United Arab Emirati politician and member of ruling family of Abu Dhabi . He is the half brother of the current President of UAE, Emir of Abu Dhabi, Khalifa bin Zayed Al Nahyan...
- HH Sheikh Mohammed bin Khalifa bin Zayed Al NahyanMohammed bin Khalifa bin Zayed Al NahyanHH Sheikh Mohammed bin Khalifa bin Zayed Al Nahyan is a United Arab Emirati politician. He is the son of current Emir of Abu Dhabi emirate, President of the United Arab Emirates, 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