The defining theme of global markets in 2025 was a return to breadth and balance, in which the technology-driven gains of recent years evolved into a broader rally across asset classes. With inflation steadily moderating and a gradual transition toward more accommodative monetary policy, investors were presented with a supportive backdrop and a deeper pool of attractive opportunities.
Global equities continued to generate strong returns, as the economic benefits of artificial intelligence began rippling outward from technology companies into the wider economy. The significant infrastructure required to support these technologies – from power generation to raw materials – drove robust earnings growth across industrials, real estate, and financial stocks. This rotation not only broadened the foundation of market returns but also prompted a geographic rebalancing, lifting non-US and emerging markets to their strongest relative performance in recent memory.
Fixed income markets also generated positive returns as the transition toward lower policy rates allowed investors to capture capital appreciation while locking in historically attractive yields. This strength extended to real assets and commodities, which benefited from the broader stability of the macroeconomic environment.
Yet, beneath these strong annual returns flowed undercurrents of heightened sensitivity and occasional market dislocations throughout 2025. Investors were frequently tested by global trade and geopolitical shifts, along with the volatility that these produced. Generating consistent returns in this environment required a careful balance between the flexibility to adapt to rapidly changing conditions, and the discipline to look beyond short-term turbulence.
After a thorough review of the transformations reshaping many aspects of the investment landscape, ADIA has, over recent years, progressively adopted a more granular, systematic, and quantitative investment process. Combined with a growing focus on higher capital velocity, this evolution has enabled allocation to strategies across and within asset classes, supporting more dynamic and agile management of both the total portfolio and its major components.
Over this period, capital was reallocated to strategies across listed equities, private assets, diversifying financial alternatives, and fixed income, in line with ADIA’s risk and return objectives.
At a total portfolio level, this resulted in increases in the allocation ranges for financial alternatives and private equity. ADIA’s percentage allocation range for real estate declined slightly due to the relative growth of other asset classes in recent years. Absolute exposure to real estate remained steady, and it remains an important component of the total portfolio offering attractive risk-adjusted returns.
Against this backdrop, ADIA delivered another year of robust overall performance in 2025. By pairing global diversification with a steady expansion of internal capabilities, ADIA was able to dynamically manage complex risk exposures and capitalise on moments of dislocation.
In public market portfolios, ADIA increased allocations to systematic and absolute-return strategies to enhance its risk-adjusted returns and manage periodic bouts of volatility. At the same time, the strength of global markets and a more accommodating financing environment allowed private market teams to realise value from mature assets and recycle capital into new opportunities. These included high-quality businesses and assets positioned to benefit from the secular expansion of artificial intelligence, evolving global supply chains, and changing demographic needs.
In parallel, ADIA continued to accelerate its own internal evolution, expanding the use of data-driven insights and technology to identify and capture new opportunities.
As at 31 December 2025, ADIA’s 20-year and 30-year annualised rates of return, on a point-to-point basis, were respectively 6.6% and 7.2%*, compared to 6.3% and 7.1% in 2024. As always, these returns can be influenced by the combination of years exiting the calculations together with the inclusion of new data from the latest financial year. This underlines ADIA’s preference to focus on long-term trends.
* Performance is measured based on underlying audited financial data and calculated on a time-weighted basis. Performance for 2025 remains provisional until final data for non-listed assets is included.
As we look to 2026 and beyond, the global economic environment is navigating a period of elevated uncertainty. While key economic indicators, such as corporate earnings and consumer demand, have demonstrated notable resilience, the landscape remains susceptible to fluctuations in sentiment and policy. Investors face a complex matrix of variables, stretching from evolving global trade dynamics to episodic geopolitical tensions that challenge the decision-making of major central banks.
A defining feature of this current environment is the changing structure of market leadership. In recent years, returns in major equity indices have been driven by an unusually narrow group of large companies. While this concentration has delivered strong performance, it has also increased market sensitivity to the earnings and capital expenditure cycles of these companies.
At the same time, a more fragmented global backdrop is introducing new challenges, requiring both disciplined risk management and the necessary agility to adapt quickly as events unfold. For a multi-generational investor like ADIA, however, our focus reaches beyond these immediate factors. Our goal is to dynamically manage cyclical risks while remaining mindful of the deeper structural forces that will reshape the global economy in the years ahead.
Foremost among these is the evolving nature of technological disruption, as the digital economy becomes increasingly tethered to the tangible world.
Just as software defined the first wave of growth, the current race to develop artificial intelligence is now driving heavy investment in infrastructure. Today, companies are deploying capital of a magnitude rarely seen, to build data centres, secure electrical transmission, and expand semiconductor capacity.
This shift has significant implications for global markets. The economic benefits of technological advancement – historically concentrated within the technology sector itself – are now spilling over into the broader industrial landscape. As this cycle matures, we expect to see increased opportunities emerge across traditional industries as they leverage these new tools to enhance their own productivity.
Yet, while this wave of innovation unlocks significant value, the pace at which new technologies are being adopted means that business models across a variety of sectors may face fundamental disruption with increasing frequency.
In such an environment, achieving investment objectives will depend less on predicting outcomes and more on maintaining a diversified, dynamic approach to capital allocation.
In turn, these same forces are fundamentally altering the business of investing itself. The integration of advanced quantitative and systematic models is rapidly becoming a core component of modern portfolio management.
While new digital tools continue to reshape the market in many ways, we believe that competitive advantage will continue to be found at the intersection of machines and people. Ultimately, the best outcomes are likely to emerge from combining technology with human judgement to interpret and apply data-driven insights within an organisational context, and to navigate systemic changes when data alone is insufficient.
Over recent years, ADIA has significantly advanced its institutional capabilities, enabling it to capture emerging opportunities and strengthen its resilience in a fluid global environment.
We have continued our multi-year focus on broadening our ability to process complex data sets, allowing our investment professionals to concentrate their judgement on those areas where human insight and experience add the greatest value.
In parallel, we have enhanced our risk management capabilities at the total portfolio level. Through the Core Portfolio Department, ADIA has a single, consolidated view of its total balance sheet across cash, fixed income and indexed equities. This allows ADIA to fund investment strategies with different risk-return profiles while maintaining sufficient liquidity across the portfolio.
As we look to the future, it is increasingly clear that the world is undergoing a period of significant transformation. While such transitions naturally generate uncertainty, they also present opportunities for investors with the foresight and readiness to capitalise on them. Through continuous refinement, ADIA is building the strong foundations required to manage the challenges and seize the opportunities that lie ahead.
Throughout this journey, our core mission remains unchanged: prudently managing capital to deliver sustained, generational growth. It is this clarity of purpose that motivates us to ensure that ADIA is prepared not just for the markets of today, but for the unfolding realities of tomorrow.
