Fund Managers Beware: Abu Dhabi Is Doing Even Better Without You

(Bloomberg) -- Global fund managers beware: the world's third-biggest wealth fund is increasingly taking its investment strategy in-house.

Abu Dhabi Investment Authority, known as ADIA, managed about 55 percent of is assets through external fund managers last year, down from 60 percent in 2016 and 75 percent in 2013, according to its annual report. It also boosted its 20-year annual rate of return to 6.5 percent at the end of 2017 from 6.2 percent a year earlier.

“ADIA continued to take advantage of cyclically high prices in some areas to selectively sell assets, while seeking out opportunities in overlooked fields with greater potential,” Managing Director Sheikh Hamed bin Zayed Al Nahyan said in the review.

Abu Dhabi, capital of the United Arab Emirates and home to about 6 percent of the world's proven oil reserves, has been consolidating its state-owned funds amid lower oil prices. Mubadala Development Co. last year merged with International Petroleum Investment Co. The new entity will manage about $250 billion of assets once Abu Dhabi Investment Council is combined into the fund.

ADIA is boosting in-house teams in areas such as alternative investments and equities. It set up a new strategy and planning department, while its internal equities department made new appointments in Europe and Japan. The private equity department hired executives to head Asia-Pacific and industrials.

READ: Kuwaiti Wealth Fund Plans to Cut Reliance on External Managers

The fund last year allocated between 32 percent and 42 percent of its assets to developed equities and 10 percent to 20 percent to emerging markets equities. Between 35 percent to 50 percent of its investments were in North America last year.

To contact the reporter on this story: Mahmoud Habboush in Abu Dhabi at mhabboush@bloomberg.net.

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Claudia Maedler

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