Abu Dhabi sovereign fund to boost active investments in fixed-income

The Abu Dhabi Investment Authority has been reducing its reliance on external fund managers and boosting in-house investment capabilities. (File/AFP)
Updated 15 July 2019

Abu Dhabi sovereign fund to boost active investments in fixed-income

  • Some 55 percent of ADIA’s portfolio is managed by external managers, down from 60 percent in 2016
  • ADIA said in its 2018 annual report its fixed income and treasury department aimed to go fully active in the coming years

ABU DHABI: Abu Dhabi Investment Authority (ADIA), the world’s third-biggest sovereign wealth fund, plans to increase active investments in fixed-income in the coming years, reducing its reliance on passive investments.
The move comes as ADIA, which manages the reserves of oil-rich Abu Dhabi, has been reducing its reliance on external fund managers and boosting in-house investment capabilities.
Some 55 percent of ADIA’s portfolio is managed by external managers, down from 60 percent in 2016, with the rest managed internally.
ADIA said in its 2018 annual report its fixed income and treasury department aimed to go fully active in the coming years, with fund managers making “active” decisions on where to invest rather than “passively” following a benchmark index.
Currently the department’s strategy is to be 40 percent active and 60 percent passive.
During 2019, as part of the transition, the department plans to add a number of new positions, mostly investment and research-focused roles.
“This provides our investment professionals with the flexibility to allocate funds between different asset types according to where they see opportunities,” it said.
ADIA said decisions in early 2018 to reduce exposure to credit and being overweight on the US dollar had benefitted its performance during the year.
ADIA has been consolidating a number of investment portfolios since 2017.
It does not disclose the size of its overall portfolio, but according to the Sovereign Wealth Fund Institute, ADIA manages around $700 billion in assets, ranking it behind the Norwegian sovereign fund and China Investment Corp.
ADIA said it took a decision last year to formally integrate climate change considerations into its investment proposal review process.
It worked alongside five global sovereign wealth funds (SWFs) to develop and publish the One Planet SWF Framework that seeks to promote the integration of climate change analysis in the management of long-term portfolios.
ADIA, which does not publish detailed financial results, said its 20-year and 30-year annualized rates of return were 5.4 percent and 6.5 percent respectively in 2018 compared with 6.5 percent and 7 percent respectively in 2017.
“While these rolling averages were impacted somewhat by the exclusion of strong gains in the mid-to-late 1980s and 1990s, ADIA’s real returns remained largely consistent with previous years and historical levels,” said ADIA managing director Sheikh Hamed bin Zayed al Nahyan.
Outlining its long-term portfolio strategy by region, it said North America would account for a maximum of 50 percent, with Europe, emerging markets and developed Asia accounting for maximums of 35 percent, 25 percent and 20 percent respectively.
Equity markets seem finely poised in 2019, ADIA said, adding that over the longer term it remained confident about the relative prospects for emerging markets – particularly China and India – versus the developed world, and this would be reflected in the emphasis it places on these markets.


White House says Trump regrets not raising tariffs higher

US President Donald Trump arrives at the G7 summit in Biarritz, France, on Sunday. Trump had been trying to use the conference to rally global leaders to do more to stimulate their economies, as fears rise of a potential slowdown in the US ahead of his reelection. (AP)
Updated 26 August 2019

White House says Trump regrets not raising tariffs higher

  • President’s comments appear at first to mark a rare moment of self-reflection by the US leader

TOKYO: President Donald Trump said Sunday that he had second thoughts about escalating the trade war with China, but the White House later reversed that message saying the president was misinterpreted and that his only regret in hiking tariffs is that he didn’t raise them higher. Trump faced a tense reception from world leaders meeting amid mounting anxiety of a global economic slowdown at the Group of Seven summit in France. During a breakfast meeting with British Prime Minister Boris Johnson, Trump suggested he had qualms about the spiraling conflict. “Yeah. For sure,” Trump told reporters when asked if he has second thoughts about escalating the dispute, adding he has “second thoughts about everything.”
But hours later, White House press secretary Stephanie Grisham issued a statement saying Trump’s comments about US tariffs on China were “greatly misinterpreted.”
She said Trump only responded “in the affirmative — because he regrets not raising the tariffs higher.” The comments appeared at first to mark a rare moment of self-reflection by the famously hard-nosed leader. But the later reversal fit a pattern for Trump in recoiling from statements he believes suggest weakness.

HIGHLIGHTS

• President Donald Trump faced a tense reception from world leaders meeting amid mounting anxiety of a global economic slowdown at the Group of Seven summit in France.

• White House said comments about US tariffs on China were ‘greatly misinterpreted.’

Trump had been trying to use the conference to rally global leaders to do more to stimulate their economies, as fears rise of a potential slowdown in the US ahead of his reelection. Trump’s counterparts, including Johnson, are trying to convince him to back off his trade wars with China and other countries, which they see as contributing to the economic weakening.

US-Japan agreement
Trump and Japan’s Prime Minister Shinzo Abe announced on Sunday a deal in principle on a major bilateral trade deal.
“It’s a very big transaction,” Trump said after talks with Abe on the sidelines of the G7 summit.
“Billions and billions of dollars,” he said. “It involves agriculture, it involves e-commerce. It involves many things. We’ve agreed in principle.”

Amazon fires
Also on Sunday, French President Emmanuel Macron said that world leaders at the G7 summit have agreed to help the countries affected by the huge wildfires ravaging the Amazon rainforest as soon as possible.
“We are all agreed on helping those countries which have been hit by the fires as fast as possible,” he told journalists.