Abu Dhabi/Bloomberg


ADIA plans to boost active investment in fixed income

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In its 2018 annual report, the Abu Dhabi sovereign wealth fund said that 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.


Abu Dhabi Investment Authority (ADIA) plans to increase active investments in fixed income in the coming years, reducing its reliance on passive investments.

In a report, ADIA stated that its Fixed Income & Treasury Department has begun scaling up its active investing, with a view to going fully active in coming years, compared with around 40 per cent currently.

The sovereign wealth fund has been reducing its reliance on external fund managers and boosting in-house investment capabilities. ADIA said that 55 per cent of the wealth fund’s portfolio is managed by external managers, down from 60 per cent in 2016 with the rest managed internally.

Additionally, the sovereign wealth fund also adopted the use of custommade software that aligns with its longterm perspective, ADIA is using advanced numerical techniques involving artificial intelligence (AI) in its portfolio construction and asset allocation

The Sovereign Wealth Fund Institute said that ADIA manages around $700 billion in assets, ranking it behind the Norwegian sovereign fund and China Investment Corporation.

The sovereign wealth fund’s the Internal Equities Department will explore the possibility of creating sub mandates within some regional and country portfolios to capture specific opportunities, as ADIA seeks to actively boast its active investment in fixed income.

Similarly, the ADIA said that its External Equities Department is also considering complementing its current pool of managers with new strategies that target modestly lower returns over time, with lower risk—an approach aimed at further enhancing its ability to generate consistent excess returns.

TAGS : Abu Dhabi Investment Authority, AI, Internal Equities Department , External Equities Department

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