In a world of diminishing returns, Abu Dhabi’s top sovereign wealth fund is hiring as it boosts active management of its estimated $697 billion portfolio.
Abu Dhabi Investment Authority plans to "add a number of new positions, mostly within investment and research-focused roles" in its fixed income and treasury department this year, according to its annual report. The fund’s 20-year annual rate of return fell to 5.4% from 6.5% a year earlier.
The fixed income and treasury department “has begun scaling up its active investing, with a view to going fully active in coming years, compared with around 40% currently,” managing director Sheikh Hamed bin Zayed Al Nahyan said in the report. The fund raised the portion of actively managed investments to 55% of its portfolio in 2018, up from 50% the previous year.
ADIA’s private equity unit is also becoming more active. It sourced about 40% of its investments last year, a new high, up from 30% the previous year. While the total value of new principal investment has more than doubled since 2016.
Sovereign wealth funds have been stepping up direct investments as they seek to generate returns in a low interest rate environment.
ADIA earlier this month agreed to buy a 30% stake in Domestic & General Group, the UK appliance warranty provider owned by CVC Capital Partners. It also teamed up with EQT Partners in pursuit of Nestle SA’s $10 billion skincare business.
ADIA, the world’s third-largest sovereign wealth fund according to the Sovereign Wealth Fund Institute, has been boosting its in-house teams over the past few years as it cuts the use of external fund managers. It manages about 45% of its assets in-house now, up from 25% in 2013.
Other key highlights of ADIA’s annual report:
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