Abu Dhabi fund in hiring mode as it scales up active investment

Bloomberg

Abu Dhabi’s top sovereign wealth fund is hiring as it boosts active management of its estimated $697 billion portfolio.
Abu Dhabi Investment Authority (Adia) plans to “add a number of new positions, mostly within investment and research-focussed roles” in its fixed income and treasury department this year, according to its annual report. The fund almost matched the performance of the S&P 500 stock index, which had an average annualised return of about 5.6 percent over the past 20 years.
Developed market equities make up as much as 42 percent of Adia’s portfolio. Besides equities, it also holds bonds, credit, alternatives, real estate, private equity, infrastructure and cash.
The fixed income and treasury department “has begun scaling up its active investing, with a view to going fully active in coming years, compared with around 40 percent currently,” HH Sheikh Hamed bin Zayed Al Nahyan, Managing Director of the Adia, said in the report. The fund raised the portion of actively managed investments to 55 percent of its portfolio in 2018, up from 50 percent the previous year.
Adia’s private equity unit is also becoming more active. It sourced about 40 percent of its investments last year, a new high, up from 30 percent the previous year. While the total value of new principal investment has more than doubled since 2016.
Sovereign wealth funds have been stepping up direct investments as they seek to generate returns in a low interest rate environment. Adia earlier this month agreed to buy a 30 percent stake in Domestic & General Group Ltd, the UK appliance warranty provider owned by CVC Capital Partners. It also teamed up with EQT Partners in pursuit of Nestle SA’s $10 billion skincare business.
Adia, one of the world’s largest sovereign wealth fund according to the Sovereign Wealth Fund Institute, has been boosting its in-house teams over the past few years as it cuts the use of external fund managers. It manages about 45 percent of its assets in-house now, up from 25 percent in 2013. “While ‘late-cycle’ has become a common term in market outlooks for 2019, we believe that the diversity and adaptability of economies means that the current cycle may well surprise with its resilience,” HH Sheikh Hamed said in the review.
The fund said Globalisation has helped boost growth and asset prices over the past few decades, and investors that have benefited from those trends need to “present the positive case and ensure that the public debate is well informed.”