For almost five decades, the Abu Dhabi Investment Authority (ADIA) has been managing the sovereign wealth fund for the emirate of Abu Dhabi. The investment organization was established with the mission to sustain the emirate’s long-term prosperity.
Understanding the ADIA
ADIA was established in 1976 by Abu Dhabi government. Although it is a government-owned investment organization, ADIA acts independently.
The organization is required to invest and reinvest Abu Dhabi’s funds. It is also required to make financial resources to maintain and secure the prosperity of Abu Dhabi available to the government. In practice, however, such withdrawals seldom occurred.
The huge wealth that the ADIA manages is sourced mainly from the large oil reserves of the emirate. Not much is known about the organization’s portfolio of holds or investment methodology as it prefers to remain secretive.
ADIA pursues the mission to sustain the emirate’s long-term prosperity by prudent investment done through committed people who reflect the cultural values of the organization and a disciplined investment process.
Despite being a government-owned organization, ADIA doesn’t have any visibility on the government spending requirements. Nor it has visibility on the activities of other government-owned investment organizations. Also, the assets that ADIA has are not classified as international reserves.
The asset categories ADIA invests in vary, from private equities, external equities, internal equities, infrastructure and real estate, treasury and fixed income, to alternative investments.
The investment activities of the organization is based on a disciplined investment strategy. This strategy aims to generate steady returns on investments over the long term. The investment strategy starts with a clearly defined appetite for risk, which is calibrated through what is called the Reference Portfolio.
The Reference Portfolio is a combination of publicly traded securities. It is developed to determine the desired level of risk is acceptable to take over the long term.
The planning activities and strategy of ADIA work in tandem, aligning investment objectives with organizational priorities. This approach, in turn, ensures that all investment activities that the organization does are tied to its short-, medium-, as well as long-term goals.
The Risk Management of Abu Dhabi Investment Authority
The organization is prudent in its investment activities. In keeping its prudent culture, risk management is embedded in all of the organization’s investments as well as other related activities. From investments in individual asset classes, asset allocation, to trade execution.
The risk management framework of ADIA is holistic. It is designed to identify and analyze all risks types across various asset classes. The framework ensures that any potential risks are effectively and efficiently managed.
Grow and Expand Business in Abu Dhabi
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