The Abu Dhabi Investment Authority (ADIA), which invests on behalf of the Government of Abu Dhabi, saw rolling returns of 17.3% during 2023 versus returns of 16.4% in 2022, which was a particularly bad year for funds across the world, data from Global SWF has revealed.

ADIA bounced back from a gruelling 2022, which saw high inflation, rising interest rates, and significantly negative returns in both stocks and bonds.

ADIA was set up in 1976 and operates on a strategy of long-term value creation. It does not invest domestically. The fund is a global investor, with over 50% of its portfolio sitting in the US, and also a very liquid investor, with over 80% of the portfolio invested in public markets (bonds, equities, hedge funds).

The sovereign wealth fund does not report single-year returns, but "we estimate them based on the 20-year and 30-year rolling returns they do report," Global SWF's founder and managing director, Diego Lopez told Zawya.

"In that context, they present a high correlation with global financial markets, and it is natural that they had a bad year in 2022 and a positive year in 2023," he added.

In addition to the markets’ recovery, ADIA has also benefitted from high oil prices, which have meant higher injections into their books during 2022 and 2023, said Lopez.  

In its 2022 review, the fund had signaled that China would be a key focus in 2023. However a year-end report by the Financial Times that analysed data from Hong Kong Stock Connect trading scheme showed that since peaking at $33 billion in August, net foreign investment in China-listed shares has dropped 87% to just $4.3 billion as fund manager sentiment on China has soured. Details of ADIA's investment flows for 2023 are yet to be disclosed.

In 2022, ADIA’s Private Equities Department (PED) completed 24 direct investments of more than $150 million across its core regions and sectors of specialisation, in line with 2021.

"We expect ADIA to keep focusing on private markets, especially Private Credit, and on diversifying away from the US, including PE and RE in China," said Lopez.

Among the big-ticket investments ADIA made in 2023 is the $451 million additional investment in Qualitas Diversified Credit Investments, in addition to its initial investment of $451 million in the Australian real estate private credit company.  

In October, ADIA invested $597 million in Indian billionaire Mukesh Ambani's Reliance Retail Ventures for a 0.59% stake.

Looking ahead, Lopez said that though 2024 started slow and positive, with global stocks at +2% in January, “there is a lot of uncertainty, and it is unclear how markets will perform the rest of the year”.

(Reporting by Brinda Darasha; editing by Seban Scaria)