Systematic cash equity strategies benefited from increased dispersion among stocks. Notably, returns were generated across various time horizons, including short-, medium-, and long-term models.
CTAs and other directional systematic strategies posted robust gains in the first half of 2024, as hopes for a soft landing in the U.S., expectations of rate cuts and enthusiasm around AI led to strong trends in equities and soft commodities. However, many of these gains were reversed in the second half as volatility and uncertainty increased.
Fundamental equity strategies were able to benefit from both the clear trends early in 2024 and the increased volatility later in the year, largely due to ongoing optimism around AI. Although short selling was challenged by the equities rally, market-neutral managers found ample opportunities to generate alpha.
Discretionary macro strategies struggled in the first half of 2024, as many had positioned for interest rates to move lower, although this positioning was ultimately rewarded as the year progressed. Currencies and commodities also contributed to performance.
It was a positive year for relative value and credit strategies, where both corporate and structured credit thrived due to the dispersion in credit conditions among issuers and sectors, as well as the narrowing of credit spreads. Meanwhile, relative value strategies capitalised on opportunities stemming from mispricings in related securities.
Within this broadly positive context, the Alternative Investments Department (AID) contributed strong absolute returns to the total ADIA portfolio in 2024, entirely independent of equity beta. The Department’s diversification ensured that top-performing strategies early in the year were balanced by others that excelled during the summer, with all strategies collectively outperforming again following the U.S. elections.
Among key initiatives, the Department continued the buildout of its managed account platform and onboarded the second phase of existing managers. This platform provides AID with a cash efficient structure that also allows for greater investment flexibility.
The Department remains focused on complementing its long-term partnerships by seeking exceptional talent across various strategies.
On the recruitment front, AID strengthened its investment team with high-quality hires, while also developing its existing team and nurturing a new generation of UAE national graduates.
Looking ahead, AID will continue to act as a diversifier for ADIA's total portfolio, generating absolute returns through allocations to uncorrelated liquid hedge fund strategies.
