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99340
Mon, 01/11/2010 - 15:56
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https://oananews.org//node/99340
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ADIA gains from high-growth markets
Abu Dhabi, After pulling back on its exposure to stocks in anticipation of the turbulence in 2008, the Abu Dhabi Investment Authority (ADIA) seized the opportunity in 2009 to beef up its exposure to high-growth markets, thereby benefitting from the dramatic rally in global markets last year, ADIA’s managing director said in an interview published yesterday according to a report in "
The National."
“Together, these actions allowed us to beat our own performance expectations and to compare favourably with the published results of other investment institutions,” said Sheikh Ahmed bin Zayed, the managing director of ADIA, in an interview to be published yesterday in the German newspaper ‘Handelsblatt’.
Sheikh Ahmed declined to answer questions concerning ADIA’s size, but analysts have long estimated ADIA to be one of the top two sovereign wealth funds in the world, ranking just behind the Saudi Arabian Monetary Authority in size. Together with its sister fund, the Abu Dhabi Investment Council, which was seeded with capital from ADIA in 2006, the funds are estimated to manage about US$425bn in assets.
ADIA is also one of the world’s most secretive and poorly understand funds, and Sheikh Ahmed’s interview is one of only two he has granted. In early 2008, he and other ADIA officials were interviewed by Businessweek, with the resulting article serving as a sort of Rosetta stone for the small community of analysts who keep track of ADIA’s various investments.
In the interview, Sheikh Ahmed downplayed ADIA’s role as a government institution, saying the authority likes to be seen as merely another diversified institutional investor that happens to be owned by the Government of Abu Dhabi.
“ADIA’s sole mission, which has not changed in over 30 years, is to secure and maintain the current and future welfare of the Emirate of Abu Dhabi,” he said, “This ensures that our investing strategy stays focused on long-term trends rather than the ups and downs of individual cycles.
He warned that, despite signs of economic recovery, substantial risks remained, in particular high government deficits, high unemployment, and the growing threat of protectionism.
"It is essential to maintain the free flow of capital between countries, and ensure that cross-border investing is not stifled by restrictive measures that may be popular within individual markets in the short term but ultimately leave us all worse off,” he said. “The world economy is still in a fragile state, and we must not jeopardise its recovery and future economic growth by building barriers to investment and shared success.”
Sheikh Ahmed said more needed to be done improve financial regulation. “The financial regulatory architecture has not kept up with the increasingly global and interconnected nature of financial systems – or the pace of innovation,” he said. “In the case of some of the more complex financial products developed in recent years the risks have also been too difficult to quantify, leading to unexpected consequences during severe market shocks. This is why ADIA has avoided them.”
Sheikh Ahmed also addressed the issue of executive compensation, saying that ADIA’s bonuses tended to be a smaller percentage of its employees’ overall compensation that at other institutions.
“Our compensation program has always had a smaller variable component than many investment institutions but a greater emphasis on fixed pay and various other benefits,” he said. “This keeps us competitive in attracting world class talent, but also encourages our employees to focus on what’s best for ADIA over the long-term rather than looking for ways to boost their short-term personal gains.”
ADIA will continue to emphasise diversification of its portfolio, Sheikh Ahmed said. ADIA keeps its assets distributed in fixed proportions, or weightings, among 24 classes of assets, Sheikh Ahmed said, with between 40 per cent to 60 per cent in global stocks. It keeps between 15 per cent and 30 per cent invested in bonds and other fixed-income securities, he said. The remainder is divided between property, private equity funds, infrastructure projects and alternative investments.
ADIA adjusts these weightings only rarely, Sheikh Ahmed said. “We have the ability in extreme situations to deviate on a temporary basis from our agreed weightings across asset classes in order to further reduce the impact of cyclical downturns,” he said. “This approach served us well during the events of the past 18 months.”
Sheikh Ahmed declined to comment, however, on one of ADIA’s biggest investments, its US$7.5bn purchase in late 2007 of what then amounted to a 4.9 per cent stake in Citigroup. ADIA has filed a lawsuit against Citigroup seeking US$4bn in damages for alleged "fraudulent misrepresentations." Citigroup has said the case has no merit. – The National
The National."
“Together, these actions allowed us to beat our own performance expectations and to compare favourably with the published results of other investment institutions,” said Sheikh Ahmed bin Zayed, the managing director of ADIA, in an interview to be published yesterday in the German newspaper ‘Handelsblatt’.
Sheikh Ahmed declined to answer questions concerning ADIA’s size, but analysts have long estimated ADIA to be one of the top two sovereign wealth funds in the world, ranking just behind the Saudi Arabian Monetary Authority in size. Together with its sister fund, the Abu Dhabi Investment Council, which was seeded with capital from ADIA in 2006, the funds are estimated to manage about US$425bn in assets.
ADIA is also one of the world’s most secretive and poorly understand funds, and Sheikh Ahmed’s interview is one of only two he has granted. In early 2008, he and other ADIA officials were interviewed by Businessweek, with the resulting article serving as a sort of Rosetta stone for the small community of analysts who keep track of ADIA’s various investments.
In the interview, Sheikh Ahmed downplayed ADIA’s role as a government institution, saying the authority likes to be seen as merely another diversified institutional investor that happens to be owned by the Government of Abu Dhabi.
“ADIA’s sole mission, which has not changed in over 30 years, is to secure and maintain the current and future welfare of the Emirate of Abu Dhabi,” he said, “This ensures that our investing strategy stays focused on long-term trends rather than the ups and downs of individual cycles.
He warned that, despite signs of economic recovery, substantial risks remained, in particular high government deficits, high unemployment, and the growing threat of protectionism.
"It is essential to maintain the free flow of capital between countries, and ensure that cross-border investing is not stifled by restrictive measures that may be popular within individual markets in the short term but ultimately leave us all worse off,” he said. “The world economy is still in a fragile state, and we must not jeopardise its recovery and future economic growth by building barriers to investment and shared success.”
Sheikh Ahmed said more needed to be done improve financial regulation. “The financial regulatory architecture has not kept up with the increasingly global and interconnected nature of financial systems – or the pace of innovation,” he said. “In the case of some of the more complex financial products developed in recent years the risks have also been too difficult to quantify, leading to unexpected consequences during severe market shocks. This is why ADIA has avoided them.”
Sheikh Ahmed also addressed the issue of executive compensation, saying that ADIA’s bonuses tended to be a smaller percentage of its employees’ overall compensation that at other institutions.
“Our compensation program has always had a smaller variable component than many investment institutions but a greater emphasis on fixed pay and various other benefits,” he said. “This keeps us competitive in attracting world class talent, but also encourages our employees to focus on what’s best for ADIA over the long-term rather than looking for ways to boost their short-term personal gains.”
ADIA will continue to emphasise diversification of its portfolio, Sheikh Ahmed said. ADIA keeps its assets distributed in fixed proportions, or weightings, among 24 classes of assets, Sheikh Ahmed said, with between 40 per cent to 60 per cent in global stocks. It keeps between 15 per cent and 30 per cent invested in bonds and other fixed-income securities, he said. The remainder is divided between property, private equity funds, infrastructure projects and alternative investments.
ADIA adjusts these weightings only rarely, Sheikh Ahmed said. “We have the ability in extreme situations to deviate on a temporary basis from our agreed weightings across asset classes in order to further reduce the impact of cyclical downturns,” he said. “This approach served us well during the events of the past 18 months.”
Sheikh Ahmed declined to comment, however, on one of ADIA’s biggest investments, its US$7.5bn purchase in late 2007 of what then amounted to a 4.9 per cent stake in Citigroup. ADIA has filed a lawsuit against Citigroup seeking US$4bn in damages for alleged "fraudulent misrepresentations." Citigroup has said the case has no merit. – The National
