Abu Dhabi sovereign fund to boost active investments in fixed-income

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.