Abu Dhabi Investment Authority saw a reduction of 90 basis points in their 20-year and 30-year annualized rates of return in 2015, said the sovereign wealth fund’s latest annual report.
Over the 20 years ended Dec. 31, ADIA returned an annualized 6.5%, down from 7.4% at the end of 2014. Over 30 years, the sovereign wealth fund returned an annualized 7.5%, down from 8.4% the previous year.
“Most markets delivered comparatively lackluster returns in 2015,” said Hamed bin Zayed Al Nahyan, managing director, in the report. “The declines witnessed in late 2015 and into 2016 offer a clear reminder of the sound logic underpinning ADIA’s diversified and disciplined approach to portfolio management.”
The fund, which does not disclose its assets but is estimated to have $792 billion in assets by the Sovereign Wealth Fund Institute, said the percentage of assets managed by external money managers was 60% in 2015. In 2014, that figure was 65%, and the reduction continues a trend from previous years.
The value of ADIA assets invested in index-replicating strategies also fell, to 50% from 55% in 2014. In 2015, ADIA also implemented a smart beta portfolio “with a view to further enhance returns from our index-replicating strategies.” The report said that while this portfolio is “relatively small, (it) complements our existing tailored approaches to maximizing returns over the long term.”
Also in 2015, the sovereign wealth fund’s alternative investments department created a new allocation, allowing it to co-invest in special situations alongside its money managers and giving it the ability to invest with smaller managers.
This year, ADIA plans to continue recruiting “to gain certain specialist skills for its investment and risk teams,” the report said.
A spokesman for the fund said it would not disclose further details.
Jack Lejk contributed to this story.