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The USD 1 tn Abu Dhabi Investment Authority (ADIA) increased its internally managed assets to 64% in 2023, up from 55% in 2022, according to its latest annual review (pdf). The sovereign wealth fund attributed this to “changes in how ADIA manages parts of its indexed equity exposures.”
Over half (54%) of Adia’s portfolio was actively managed, while 46% was managed passively, according to the report.
REMEMBER- The sovereign wealth fund has been transforming its investment strategy over the last five years to make it a faster and more data-driven process that maximizes returns, Bloomberg reported earlier this week.
The breakdown:
- Developed equities comprised the lion’s share of its portfolio at 32%-42%;
- Allocation to private equity increased to 12%-17% in 2023, up from 10%-15% in 2022;
- Emerging market equities and government bonds accounted for 7-15% each;
- Financial alternatives and real estate stood at 5%-10% each;
- Small cap equities made up 1%-5%, infrastructure and credit made up 2%-7% each, and cash 0%-5%.
By the region: Adia invested primarily in North America in 2023, comprising 45%-60% of its portfolio, followed by Europe, which made up 15%-20%. The fund allocated 10%-20% to emerging markets, and 5%-10% to developed Asia.
Growth came despite rising interest rates in 1H 2023 and peaking inflation. “Overall, Adia was well positioned to capitalize on the strong gains in parts of these markets, while benefiting from dislocations in areas where conditions were more challenging,” the report reads.
Still, 20-year and 30-year annualized returns dropped slightly to 6.4% and 6.8% at the end of 2023, down from 7.1% and 7% in 2022.
Adia’s spree of takeovers carried on this year, capitalizing on a slowdown in activity among private equity firms amid higher interest rates and a liquidity crunch. Most recently, the Abu Dhabi-based fund invested USD 1 bn in US-based data analytics firm Qlik earlier this week, acquiring the stake from a fund owned by private equity owner Thoma Bravo, and joined a consortium including asset managers BlackStone and Vista two months ago to acquire software provider Smartsheet for USD 8.4 bn. It also partnered up with private equity firm Advent International in June to invest between USD 2.5-3 bn in wealth management firm Fisher Investments.
