ADIA’s investment strategy involves looking beyond individual economic cycles and focusing on strategies aimed at capturing secular trends to generate long-term, sustainable returns.
Our approach begins by identifying an acceptable level of risk, and then building outwards by adding a highly diversified range of asset classes that allow us to maximise returns within these parameters.
The Strategy Unit is at the heart of this process. Its market strategists and asset specialists, supported by quantitative analysts, identify new and emerging trends in the global economy and then compare the potential risks and returns of different asset classes within those scenarios. The result is a recommended portfolio mix that contains more than two dozen asset classes and sub-categories, each with a fixed weighting, which together form ADIA’s shared, long-term view of the world, otherwise known as our policy portfolio or “neutral benchmark.”
The Strategy Unit regularly reviews the neutral benchmark and suggests any necessary changes to either new or existing asset classes and their respective weightings. It also researches and proposes medium-term strategies around the benchmark with the objective of enhancing returns. This may include occasional “off-benchmark” opportunistic investments.
Our investment strategy requires a careful balance between discipline and flexibility: discipline to ensure the portfolio remains closely aligned with our long-term vision; and flexibility to adapt to major changes ahead of long-term trends, such as our decision to begin investing in alternatives as early as 1986 and in private equity in 1989.
Any proposed changes to the neutral benchmark are subject to review by the Strategy Committee followed by the Investment Committee before a recommendation is made to the Managing Director. Once approved, the investment departments are given mandates with specific benchmarks, guidelines and excess return targets.