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ABU DHABI / WAM
The Abu Dhabi Investment Authority (ADIA) on Thursday published its 2023 ADIA Review, providing a thorough overview of its activities over the past year and outlook for the year ahead.
The 2023 ADIA Review includes a detailed analysis of market conditions across the many asset classes in which the authority invests and significant developments within each investing department. According to the report, the MSCI World Index rose 24% in 2023, with most of the gains coming in the last few months of the year as risk appetite surged.
Meanwhile, fixed-income markets moved in lockstep with equities once again, rising late in the year as investors anticipated interest rate cuts.
“It was a more nuanced picture for private assets as high interest rates complicated deal economics,” added the report.
Overall, the Abu Dhabi Investment Authority was well positioned to capitalise on the strong gains in parts of these markets, while benefiting from dislocations in areas where conditions were more challenging. In recent years, ADIA has sought to emphasise total returns at a portfolio level, in contrast to the more traditional approach of tasking individual asset classes to outperform benchmarks.
At a total portfolio level, the proportion of ADIA’s assets managed internally has also grown, from 55% in 2022 to 64% in 2023. This increase can be mostly attributed to changes in how ADIA manages parts of its indexed equity exposures through the Core Portfolio Department, which has substantially expanded its internal capabilities in recent years.
In private equity, ADIA has leveraged its decades-long relationships in the sector to broaden and deepen how it accesses the sector and ultimately enhance returns. In 2023, ADIA’s allocation to private equity grew to 12%-17% of ADIA’s total portfolio, in comparison with 10%-15% in 2022.
ADIA believes that several interconnected, global transitions are currently underway: technological, economic, and energy-related, among various others. The authority has been positioning itself to participate in and capitalise on opportunities generated by these dynamic trends in numerous ways. As at December 31 2023, ADIA’s 20-year and 30-year annualised rates of return, on a point-to-point basis, were respectively 6.4% and 6.8%, compared to 7.1% and 7.0% in 2022.