ABU DHABI: Abu Dhabi Investment Authority (ADIA), the world’s third-biggest sovereign wealth fund, plans to increase active investments in fixed-income in the coming years, reducing its reliance on passive investments.
The move comes as ADIA, which manages the reserves of oil-rich Abu Dhabi, has been reducing its reliance on external fund managers and boosting in-house investment capabilities.
Some 55 percent of ADIA’s portfolio is managed by external managers, down from 60 percent in 2016, with the rest managed internally.
ADIA said in its 2018 annual report its fixed income and treasury department aimed to go fully active in the coming years, with fund managers making “active” decisions on where to invest rather than “passively” following a benchmark index.
Currently the department’s strategy is to be 40 percent active and 60 percent passive.
During 2019, as part of the transition, the department plans to add a number of new positions, mostly investment and research-focused roles.
“This provides our investment professionals with the flexibility to allocate funds between different asset types according to where they see opportunities,” it said.
ADIA said decisions in early 2018 to reduce exposure to credit and being overweight on the US dollar had benefitted its performance during the year.
ADIA has been consolidating a number of investment portfolios since 2017.
It does not disclose the size of its overall portfolio, but according to the Sovereign Wealth Fund Institute, ADIA manages around $700 billion in assets, ranking it behind the Norwegian sovereign fund and China Investment Corp.
ADIA said it took a decision last year to formally integrate climate change considerations into its investment proposal review process.
It worked alongside five global sovereign wealth funds (SWFs) to develop and publish the One Planet SWF Framework that seeks to promote the integration of climate change analysis in the management of long-term portfolios.
ADIA, which does not publish detailed financial results, said its 20-year and 30-year annualized rates of return were 5.4 percent and 6.5 percent respectively in 2018 compared with 6.5 percent and 7 percent respectively in 2017.
“While these rolling averages were impacted somewhat by the exclusion of strong gains in the mid-to-late 1980s and 1990s, ADIA’s real returns remained largely consistent with previous years and historical levels,” said ADIA managing director Sheikh Hamed bin Zayed al Nahyan.
Outlining its long-term portfolio strategy by region, it said North America would account for a maximum of 50 percent, with Europe, emerging markets and developed Asia accounting for maximums of 35 percent, 25 percent and 20 percent respectively.
Equity markets seem finely poised in 2019, ADIA said, adding that over the longer term it remained confident about the relative prospects for emerging markets – particularly China and India – versus the developed world, and this would be reflected in the emphasis it places on these markets.
Abu Dhabi sovereign fund to boost active investments in fixed-income
Abu Dhabi sovereign fund to boost active investments in fixed-income
- Some 55 percent of ADIA’s portfolio is managed by external managers, down from 60 percent in 2016
- ADIA said in its 2018 annual report its fixed income and treasury department aimed to go fully active in the coming years
Saudi investment pipeline active as reforms advance, says Pakistan minister
ALULA: Pakistan’s Finance Minister Mohammed Aurangzeb described Saudi Arabia as a “longstanding partner” and emphasized the importance of sustainable, mutually beneficial cooperation, particularly in key economic sectors.
Speaking to Arab News on the sidelines of the AlUla Conference for Emerging Market Economies, Aurangzeb said the relationship between Pakistan and Saudi Arabia remains resilient despite global geopolitical tensions.
“The Kingdom has been a longstanding partner of Pakistan for the longest time, and we are very grateful for how we have been supported through thick and thin, through rough patches and, even now that we have achieved macroeconomic stability, I think we are now well positioned for growth.”
Aurangzeb said the partnership has facilitated investment across several sectors, including minerals and mining, information technology, agriculture, and tourism. He cited an active pipeline of Saudi investments, including Wafi’s entry into Pakistan’s downstream oil and gas sector.
“The Kingdom has been very public about their appetite for the country, and the sectors are minerals and mining, IT, agriculture, tourism; and there are already investments which have come in. For example, Wafi came in (in terms of downstream oil and gas stations). There’s a very active pipeline.”
He said private sector activity is driving growth in these areas, while government-to-government cooperation is focused mainly on infrastructure development.
Acknowledging longstanding investor concerns related to bureaucracy and delays, Aurangzeb said Pakistan has made progress over the past two years through structural reforms and fiscal discipline, alongside efforts to improve the business environment.
“The last two years we have worked very hard in terms of structural reforms, in terms of what I call getting the basic hygiene right, in terms of the fiscal situation, the current economic situation (…) in terms of all those areas of getting the basic hygiene in a good place.”
Aurangzeb highlighted mining and refining as key areas of engagement, including discussions around the Reko Diq project, while stressing that talks with Saudi investors extend beyond individual ventures.
“From my perspective, it’s not just about one mine, the discussions will continue with the Saudi investors on a number of these areas.”
He also pointed to growing cooperation in the IT sector, particularly in artificial intelligence, noting that several Pakistani tech firms are already in discussions with Saudi counterparts or have established offices in the Kingdom.
Referring to recent talks with Saudi Minister of Economy and Planning Faisal Alibrahim, Aurangzeb said Pakistan’s large freelance workforce presents opportunities for deeper collaboration, provided skills development keeps pace with demand.
“I was just with (Saudi) minister of economy and planning, and he was specifically referring to the Pakistani tech talent, and he is absolutely right. We have the third-largest freelancer population in the world, and what we need to do is to ensure that we upscale, rescale, upgrade them.”
Aurangzeb also cited opportunities to benefit from Saudi Arabia’s experience in the energy sector and noted continued cooperation in defense production.
Looking ahead, he said Pakistan aims to recalibrate its relationship with Saudi Arabia toward trade and investment rather than reliance on aid.
“Our prime minister has been very clear that we want to move this entire discussion as we go forward from aid and support to trade and investment.”
