The Abu Dhabi Investment Authority has restructured its external equities departments in a move aimed at streamlining its operations.
Adia reshuffles equities units
The Abu Dhabi Investment Authority (Adia) has restructured some of its largest investment departments, giving Sheikh Mohammed bin Khalifa, a son of Sheikh Khalifa, President of the UAE, a major new role.
Adia is one of the world's largest sovereign wealth funds, with assets estimated at more than US$300 billion (Dh1.1 trillion) made up from decades of oil revenue surpluses.
The authority eliminated four geographically focused external equities departments, replacing them with a pair of new ones covering indexed and actively managed funds.
Executives in the two new departments are responsible for allocating funds to outside managers who then invest the money in the stock market. About 80 per cent of Adia's assets are managed externally, and about 60 per cent of its assets are allocated to indexed strategies.
The changes, made last month, aim to streamline Adia's relationships with external fund managers and simplify the execution of asset allocation decisions. They follow a trend among fund management companies to specialise in indexed or active strategies instead of specific geographies.
"The creation of our new indexed funds and active departments will streamline how we manage our relationships in the equities space with external fund managers," an Adia spokesman said.
"But it also forms part of our broader efforts to continually enhance the way we share and pool our knowledge and resources across the organisation."
Under the restructuring, the fund scrapped external equities departments that covered the Americas, Europe, the Far East and emerging markets. Those were replaced by the new Indexed Funds Department, which oversees Adia's external passively managed stock investments, and the External Equities Department, which oversees its external actively managed stocks.
Index funds replicate the performance of an index, such as the S&P 500 in the US, and invest in a broad cross section of stocks. Actively managed funds, on the other hand, try to use smart stock selection to exceed the performance of indexes or accomplish other specific goals for investors.
Sheikh Mohammed, who is also a member of the Executive Council of Abu Dhabi, is in charge of the Indexed Funds Department as its executive director. He was previously executive director of Adia's old External Funds, Europe department.
Obaid Al Suwaidi, who had been director of the External Funds, Far East department, was appointed the executive director of the External Equities Department.
The changes mirror a 2007 restructuring of how Adia manages its internal equities. Four years ago, the fund consolidated investments made directly on its behalf by its own employees into a single department called Internal Equities.