Adia posts higher gains in 2017 on buoyant stock markets returns

Abu Dhabi's sovereign wealth fund says 30-year annualised returns rose to 7% last year

Adia is hosting more than 180 representatives of sovereign wealth funds, Africa focused asset managers, bankers at a two-day event in the capital that looks at the investment potential of the African continent. Delores Johnson / The NationalShow less

The Abu Dhabi Investment Authority, one of the world’s largest sovereign wealth funds, posted higher annualised rates of return in 2017 as global equity markets rallied to record highs amid buoyant economic growth around the world.

Adia's 30-year annualised rate of return rose to 7 per cent last year compared to 6.9 per cent in 2016 while the fund's 20-year annualised rate of return climbed to 6.5 per cent in 2017 from 6.2 per cent recorded a year earlier. The fund said the figures in its annual review published on Monday were provisional until data for non-listed assets is included.

"In investment terms, 2017 provided a reminder of the ability of capital markets to surprise – in this case in a positive way," Sheikh Hamed bin Zayed, Adia's managing director, said in the review.

"Global equity markets appreciated close to 25 per cent in US dollar terms. Even with lacklustre results from global bonds, balanced portfolio returns reached high double digits."

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The S&P 500 which has hit multiple records, last year put in its best first-half performance since 2013, before finishing the year 22 per cent higher, helped by continued outperformance of technology stocks. The MSCI Emerging Markets Index on the other hand returned 37 per cent during 2017. The markets in the Arabian Gulf region, however, lagged the global equities rally.

The Adia managing director said that emerging markets continued to be a target for the fund, which in recent years has backed investments in the fast growing economies such as India and China.

“As in previous years, emerging markets remained a key focus, particularly India and China as we sought to build further on our knowledge and deepen our relationships in these markets,” he said.

Sheikh Hamed said as of early 2018 global economic conditions around the world remained robust and well balanced in many parts of the world and that the main predictors of a recession - high inflation and restrained monetary conditions - remained absent.

"The short-term outlook for global growth remains positive. The prevailing interest rate environment, ample liquidity and narrower credit spreads during the course of 2017 have combined to create conditions at the start of 2018 even more conducive to growth than those of a year ago," he said.