The fund, whose assets range from Citigroup bonds to a
stake in London’s Gatwick Airport, expects economic growth to remain
“hesitant” in the near-term but said it was confident equity returns
will revert back to historical levels of 6-8 percent in a post-recovery
phase. “Looking forward, we anticipate global economic growth to
remain hesitant in the near term as governments in major developed
markets begin the sensitive task of cutting potentially burdensome debt
levels without undermining growth,” ADIA said in the report. “Assuming
bond yields remain low and in the absence of major negative macro
events - equities appear relatively attractive even using conservative
assumptions with regard to the equity-risk premium.” ADIA
provided a rare glimpse into its investment portfolio with its first
annual review published in 2010. In the same year, ADIA named Sheikh
Hamed Bin Zayed Al-Nahayan, the brother of the UAE’s ruler, as managing
director after the death of previous head Sheikh Ahmed in a glider crash
in Morocco. ADIA, considered to be one of the world’s largest
sovereign funds, returned 7.6 percent on an annualized basis over a
20-year period, as of Dec. 31, 2010, it said in the review. That was
higher than the 6.5 percent annualized return for the previous year. On the same basis, the fund returned 8.1 percent over a 30-year period, against 8.0 percent in 2009. Overall
portfolio composition remained relatively unchanged from the previous
year with developed market equities gaining maximum allocation of 45
percent. Emerging market equities formed between 10-20 percent of
the total portfolio, while government bonds formed at least 10 percent
of its portfolio with a maximum allocation of 20 percent. North
America and Europe accounted for a major chunk of investments, with
about 60 to 85 percent going to the regions. Emerging markets
constituted at least 15 percent. ADIA restructured its external
equities department, separating indexed funds from active funds as part
of a more focused strategy, it said last month.While the Abu Dhabi
fund does not disclose its net worth, the Sovereign Wealth Fund
Institute estimated its value at $627 billion, making it the largest
sovereign wealth fund in the world.
