The Authority has made significant efforts in recent years to enhance its investment flexibility and adaptability to changing market conditions.
Abu Dhabi Investment Authority (ADIA) has issued its annual report for the year 2022, which summarises the Authority’s achievements and actions during the past year.
H.H. Sheikh Hamed bin Zayed Al Nahyan, Managing Director of ADIA, said that the Authority has made significant efforts in recent years to enhance its investment flexibility and adaptability to changing market conditions.
In his introductory speech in the report, he added, “ADIA was successful in capturing pockets of absolute return across asset classes, underlining the value of its diversified portfolio in a year where equities and bonds experienced an atypical correlation.”
He explained that ADIA continued to explore data-driven and quantitative strategies at both a total portfolio and asset-class level, noting that on 31st December 2022, ADIA’s 20-year and 30-year annualised rates of return, on a point-to-point basis, were 7.1 percent and 7.0 percent respectively, compared to 7.3 percent and 7.3 percent in 2021.
He pointed out that in 2023, financial markets will likely remain vulnerable to a range of external influences. These include the trajectory of global growth and inflation, the possible negative consequences of monetary tightening on financial institutions, and ongoing geopolitical risks. “Estimates suggest that more than $3 trillion a year is needed to support global economic growth aspirations and provide citizens with essential services. Importantly, this includes ventures aimed at accelerating the energy transition,” he said.
He emphasised that ADIA is clear-sighted about the profound impact that climate change will continue to have on the investment landscape and the opportunities that it presents. In 2022, ADIA co-hosted the One Planet Sovereign Wealth Funds (OPSWF) CEO Summit in Abu Dhabi, which convened global institutional investors with combined assets exceeding $37 trillion.
He noted that this summit witnessed the establishment of a permanent platform, OPSWF, to enhance collaboration among global institutional investors on energy transition issues, highlighting that the priorities of Abu Dhabi Investment Authority closely align with the goals of the UAE, as evidenced by the country’s role as the host of the United Nations Climate Change Conference (COP28).
In conclusion, he said, “We are enthusiastic about the opportunities that lie ahead, and in our ability to continue to deliver on our mission long into the future.”
According to the annual report, Abu Dhabi Investment Authority has succeeded in significantly enhancing its operations in recent years, increasing its capacity to achieve outstanding performance in a dynamic and evolving investment landscape.
The report points out that structural changes within Abu Dhabi Investment Authority have improved the focus of the organisation and enabled it to mobilise resources more effectively to seize fast-moving opportunities and achieve optimal returns across the total portfolio.
One of the key elements of this is the enhancement of investment and support activities within Abu Dhabi Investment Authority through the creation of two integrated and interconnected divisions, the Core Portfolio Department (CPD) and the Central Investment Services Department (CISD).
The report notes that both divisions were formed in 2021 and further developed their models in 2022, making significant progress in enabling ADIA to manage the total portfolio and support the investment departments in implementing their strategies.
The report also highlights that in 2022, the Authority further refined its investment activities by separating real estate and infrastructure investment teams into independent sections.
It explains that, as a long-term investor, Abu Dhabi Investment Authority attaches great importance to defining the fundamental characteristics of the investment landscape, both now and in the future, which has led to an increased focus on scientific thinking in recent years and the development of data-driven quantitative methodologies that enable it to leverage the essential uncertainty that characterises investment markets.
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