ADIA has evolved its operations significantly over recent years, enhancing its ability to outperform in a dynamic and uncertain investment landscape. In 2022, the results of these efforts began to intersect and deliver cumulative benefits across the organisation.
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At an organisational level, ADIA's structural changes have sharpened its focus and enabled it to mobilise resources more effectively to capture fast-moving opportunities. Underlying it all has been a simple objective: to optimise returns at a total portfolio level.
A key element of this has been strengthening the core of ADIA's investment and support activities through the creation of two complementary and interlinked departments: the Core Portfolio Department (CPD) and the Central Investment Services Department (CISD). Both formed in 2021, CPD and CISD developed their operating models further in 2022, making significant progress in enabling ADIA's management of the total portfolio and supporting investment departments to execute their strategies with increased agility.
CPD is responsible for implementing ADIA's benchmark exposures, managing its treasury-related activities and executing equity, fixed income, money market and currency trades. In 2022, CPD demonstrated its potential as a centre of excellence by building its internal quantitative capabilities and seeking to extract higher returns from a single core portfolio of public equities and fixed income assets.
CISD, meanwhile, seeks to strengthen ADIA's investment processes through enhanced operational support activities, data services and total portfolio support activities. In 2022, CISD continued to play an integral role in harmonizing ADIA's technology systems, while acting as a key source of visibility and intelligence on its overarching portfolio exposures and correlations.
In 2022, ADIA also further refined its investment activities, separating its real estate and infrastructure investment teams into standalone departments. This recognised the growth of the infrastructure portfolio since its creation in 2007, while enhancing the strategic focus of both departments.
As ADIA has improved its internal efficiency, its headcount in support functions has been reduced. This has been offset in part by active recruitment in investment areas, particularly in private markets and technology-driven specialisations.
As a long-term investor, ADIA places great emphasis on identifying the underlying characteristics of the investment landscape, both now and in the future, and positioning itself appropriately. This has led ADIA to pursue a more scientific mindset across the organisation in recent years, and develop quantitative and data-led methodologies that enable it to capitalise on the inherent uncertainty that defines investment markets.
This can be seen in its purest form in ADIA's Quantitative Research & Development team. Comprising a multidisciplinary group of more than 50 experts, the team uses complex models to analyse data, generate investable ideas and put them into production. Organised as a problem-solving machine, the team's goals include optimising the overall investment management process at ADIA.
In 2022, the team implemented its first investment strategies and is continuing to recruit globally-respected experts in diverse areas such as machine learning, strategy development, portfolio construction and implementation, risk, and digital platforms, among others.
Another example can be found in ADIA's Fixed Income Department, which has sought to diversify its sources of return with quantitative strategies, building out its internal team of specialists and implementing robust risk-management processes. Meanwhile, the Real Estate Department is harnessing the power of data and cutting-edge quantitative methodologies for portfolio strategy, optimisation and risk management.
At a total portfolio level, ADIA deployed cross-departmental squads in 2022 to analyse investment themes and determine how best to access them. Similarly, we explored how to increase our exposure to market sectors with potential to outperform in coming years.
Meanwhile, ADIA's more nuanced approach to diversification proved critical in a year where a confluence of unique market conditions resulted in sharp falls in most asset classes.
In summary, these initiatives and outcomes were made possible by the significant steps that ADIA has taken to enhance its operational agility, and the processes that support its core objectives.
The vision that ADIA embarked upon many years ago has entered a new stage. While more remains to be done in many areas, our efforts to date are delivering tangible results. By embedding continual learning and evolution into its operating model, ADIA is increasingly well placed to succeed in what will remain a rapidly evolving investment landscape.
