The Abu Dhabi Investment Authority (Adia) recorded a fall in long-term returns last year amid volatility in global financial markets.
Investments generated returns of 6.9 per cent at the end of the year, compared with 7.6 per cent a year earlier, measured in US dollars over 20 years. Returns averaged 8.1 per cent over 30 years, unchanged from a year earlier. The fund does not disclose annual performance.
“The distinction between the developed and emerging economies is fading faster than many had imagined,” said Sheikh Hamed bin Zayed Al Nahyan, the managing director of Adia, in its annual review published yesterday.
“The clearest sign of this is the contrast between widespread downgrades in the credit ratings of developed economies and the continued strengthening of many emerging countries.”
Adia has grown to become one of the world’s largest sovereign wealth funds (SWFs) since its creation in 1976 with a mission to invest on behalf of the Government of Abu Dhabi, focusing on long-term value creation.
While it does not disclose the value of its assets, research organisations such as the Peterson Institute for International Economics and the Sovereign Wealth Fund Institute rank it as the world’s largest state-owned investment vehicle.
Adia restructured several departments last year as its workforce grew to 1,275 – an increase of about 6 per cent on 2010.
That included combining its property and infrastructure activities into one department. At the same it merged four geographically focused external equities departments into two units – the Indexed Funds Department and the External Equities Department.
Global SWFs controlled about US$4 trillion (Dh14.69tn) in assets in March last year, up from $3.6tn in 2010, according to PricewaterhouseCoopers (PwC).
Some of the world’s largest SWFs are to be found in the Middle East, where governments spend money earned from oil and gas exports on long-term investments.
But the emergence of large Asian funds in recent years is fast changing the landscape, analysts say.
“Commodity-based funds, centred largely in the Middle East, are being challenged for ascendency by funds which are financed from trade or fiscal surpluses,” said PwC’s Impact of Sovereign Wealth Funds on Economic Success report.
“Whilst Singapore has been saving in this type of fund since the early 1980s, the establishment of a number of funds in China and elsewhere mean that non-commodity funds now account for around 40 per cent.”
Asia has also become an increasing focus of SWFs from the Arabian Gulf seeking to tap the region’s fastest-growing economies.
Qatar Investment Authority, a fund based in Doha, plans to invest as much as $5 billion in China under the qualified foreign institutional investor programme, the China Securities Journal reported this week.
Adia started publishing some performance figures two years ago. The move followed its appointment as co-chair with the IMF of the International Working Group of Sovereign Wealth Funds in 2008.
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