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Abu Dhabi Investment Authority no longer has the world’s richest sovereign wealth fund says SWFI

Posted on 05 November 2012 with no comments from readers

The Abu Dhabi Investment Authority has lost its crown as the world’s richest sovereign wealth fund to Norway, according to a ranking compiled by the Sovereign Wealth Fund Institute.

The Norwegian Government Pension Fund has $656 billion under management, that’s $29 billion more than ADIA. However the Abu Dhabi sovereign wealth fund for less than one million nationals is still bigger than the $533 million estimated for Saudi Arabia’s SAMA Foreign Holdings and the Kuwait Investment Authority whose asset base was severely hit by the Iraqi occupation.

ADIA’s assets

ADIA owns less than five per cent in many of the world’s top quoted companies as well as Citigroup bonds and a recently acquired stake in London’s Gatwick Airport.

The SWFI report noted that a third of the investment funds held by the world’s top 20 investment funds are located in the Middle East with an estimated $1.8 trillion under management. It is no wonder global fund managers constantly show up in the Gulf States.

In June ADIA published its annual report, though this did not disclose the fund size, any of its positions or actual profits. All it reported was a fall in 20-year annualised profit margins from 7.6 to 6.9 per cent between 2010 and 2011.

MD Sheikh Hamed Bin Zayed Al Nahyan then stated that 2011 was a year ‘that reinforced our view of the important role that diversification and maintaining a long-term focus can play in safeguarding against unexpected risks and delivering sustainable returns.

Diversification

‘Economic advances require the input of capital through a range of vehicles, from private equity and direct investments to public equities, hedge funds and also government bonds… As a long-term investor, we see ourselves and others with similar investment horizons as providers of this necessary capital, with the advantage of patience and the ability to ride out dips in the economic cycle.’

For a nation of eight million people, some seven million of them expatriate workers, the Abu Dhabi sovereign wealth funds represents a remarkable source of economic stability and a diversification away from an overwhelming dependence on oil revenues.

Of course ADIA is only one of of a collection of funds, though the others are understood to be much smaller. When these are rolled up Abu Dhabi still holds the largest sovereign wealth funds in aggregate. The UAE’s leading emirate has gotten so rich it is even diversifying its sovereign wealth funds.

Posted on 05 November 2012 Categories: GCC Economics, GCC Stock Markets, Sovereign Wealth Funds

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