Operational Review

As a responsible global investor with a 40-year track record built across market cycles, ADIA has long recognised the importance of building resilience into our organisation to ensure that we remain
operational in all circumstances.

This commitment was called upon as ADIA reacted to the onset of the Covid-19 pandemic with swift and decisive action. We immediately took steps to protect the health and wellbeing of our employees, while continuing to operate without interruption and maintaining – or in some cases even improving – levels of productivity, collaboration and speed of decision making. This was a time of accelerated evolution at ADIA, as we emerged with important lessons learned to further enhance our operational efficiency.

The response to this complex and dynamic situation offered strong evidence of ADIA’s increased organisational agility, an area of focus over recent years through the ADIA-Wide Planning (AWP) process. AWP is a comprehensive management system aimed at ensuring that ADIA delivers on its long term objectives by dynamically evolving its strategy, internal structure and ability to execute as the investment environment changes.

In 2020, the AWP programme resulted in important progress on a number of organisation-wide priorities that cross departmental boundaries, focused on deploying our people and resources most effectively in support of ADIA’s investment priorities.

A middle and back office streamlining programme commenced, with the objective of increasing overall speed, efficiency and flexibility of support functions across the organisation to meet the needs of investment teams.

The drive to increase internal agility was demonstrated in numerous ways across ADIA. The Fixed Income & Treasury Department (FITD) and the Alternative Investments Department (AID) have worked in recent years to simplify their respective portfolio structures and both now operate a single investment pool. These models were successful in increasing speed and efficiency in the investment process, while also providing improved visibility on performance and, as a result, alignment to overall objectives.

The Human Resources Department implemented a number of changes as part of its ongoing programme to simplify internal policies and processes while maintaining high levels of support to employees. The Operations Department continued to deliver significant and ongoing improvements in efficiency and automation, including increases in internal straight through processing rates.

ADIA’s active equity teams were reorganised in 2020 with the creation of the Equities Department, combining the previously-separate External and Internal Equities Departments. In addition to creating greater alignment between ADIA’s active equity exposures and its total portfolio objectives, this structure allows the department to select how best to access the markets it believes offer the greatest potential for alpha generation through active management, either through internal teams or external managers.

One of ADIA’s main competitive advantages has always been its ability to take a truly long-term perspective. That remains, but this is now being complemented by enhancing our ability to identify and capture short-term opportunities.

This was illustrated by the Infrastructure Division during the year, as it used its mandate flexibility to prioritise listed investments when prices diverged between public and private markets early in the Covid-19 pandemic.

ADIA has demonstrated its ability to innovate and adapt, often in bold ways, at important inflection points in the external investing landscape. As advances in technology transform the business of investing, we believe that we are at one of these points again today, although with implications that are potentially more far-reaching than those of the past.

Across the organisation, ADIA plans to invest selectively in growing its capabilities in line with the changing nature of global markets, recognising that capturing future sources of excess return will likely require new and expanded skillsets to complement traditional investing talent.

One example in 2020 was the creation of a team in the Strategy & Planning Department that will develop and implement investment strategies using a quantitative, scientific approach. The build out of this multi-disciplinary team began in 2020 and recruitment will continue, as ADIA seeks to draw on the latest developments in areas such as machine learning and big data to enhance the investment strategy development process.

Total Employees
1,680 from 65 countries

Another fundamental shift in the external investing landscape is the growing momentum behind investors’ response to climate change.

In addition to its involvement in the important work of the One Planet Sovereign Wealth Fund Working Group, ADIA’s exposure to renewable energy continued to grow during the year. Through Infrastructure Division’s investments, ADIA now has an indirect interest in assets with a renewable energy capacity of more than 20 gigawatts, and continues to invest in opportunities associated with a lower-carbon future. The Real Estate Division developed new tools to assess and manage climate change risk within its portfolio during the year, while the Indexed Funds Department introduced a new portfolio that systematically integrates the opportunities and risks associated with climate change.

Reflecting on 2020, ADIA was able to draw on the collective efforts of its people to meet the significant and diverse operational challenges posed by the Covid-19 pandemic while also implementing several important internal initiatives. Looking ahead, we will continue to evolve our organisational capabilities and empower our people to simplify processes and reduce bottlenecks in pursuit of ADIA’s investment objectives.