Santiago Principles Self-Assessment

Abu Dhabi Investment Authority

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  • Pillar 1: Legal
  • Pillar 2: Institutional
  • Pillar 3: Investment
Principle 1

1. The legal framework for the SWF should be sound and support its effective operation and the achievement of its stated objective(s).

1.1. The legal framework for the SWF should ensure legal soundness of the SWF and its transactions.

1.2. The key features of the SWF’s legal basis and structure, as well as the legal relationship between the SWF and other state bodies, should be publicly disclosed.

Abu Dhabi Investment Authority (ADIA) is a public institution established in 1976 by the Government of the Emirate of Abu Dhabi as an independent government investment institution.

ADIA is wholly owned by the Government of the Emirate of Abu Dhabi and has an independent legal identity with full capacity to act in fulfilling its statutory mandate and objectives. ADIA's constitution is set out in Law No.(5) of 1981 Concerning the Re-organisation of the Abu Dhabi Investment Authority as amended in 1997. Law (5) provides separation of roles and responsibilities of the owner, the governing entity, and the management.

ADIA is also subject to constitutional supervision by the Government that is vested with the Supreme Council for Financial and Economic Affairs (the "Council"). The Council was established by Law No. 24 establishing the Supreme Council for Financial and Economic Affairs enacted on 24 December 2020 ("Law No. 24").

Pursuant to Law No. 24, the Council's responsibilities include setting and approving strategies and public policies, regulating financial, investment and economic affairs, reviewing the implementation of the policies, and monitoring and evaluating the performance of ADIA (and other specified state-owned entities). In addition, it may issue directions to ADIA (and other specified state-owned entities), including in relation to government ownership policy, investment controls and standards as well as borrowing policy.

Principle 6

6. The governance framework for the SWF should be sound and establish a clear and effective division of roles and responsibilities in order to facilitate accountability and operational independence in the management of the SWF to pursue its objectives.

Governing body

ADIA's Board of Directors is the supreme body having absolute control over its affairs and the discharge of its business. The Board is composed of a Chairman, a Deputy Chairman, a Managing Director, and other Board members who, pursuant to Law No. 24, are now appointed by a decision of the Chairman of the Council. ADIA's Board of Directors meets periodically, as required for the establishment and review of ADIA's strategic policy, as part of its oversight of ADIA. ADIA's Board does not normally involve itself in ADIA's investment and operational decisions, as the Managing Director is assigned these responsibilities by Law(5).

ADIA’s Managing Director has sole responsibility for the implementation of ADIA’s strategy and administering its affairs, including all decisions related to investments. Investment decisions are based solely on economic objectives in order to deliver sustained long-term financial returns.

The Managing Director, or those to whom he delegates, acts as ADIA’s legal representative in dealings with third parties.

A number of key committees support the governance framework:

The Audit Committee is appointed by, and reports to, the Board and provides oversight of the appointment of external auditors, financial reporting in accordance with International Financial Reporting Standards (IFRS), systems of internal control and internal audit processes.


The Investment Committee assists the Managing Director and is responsible for managing and overseeing investment-related matters. The Managing Director chairs the Investment Committee, assisted by two Deputy Chairmen, with the participation of the Executive Directors of all investment departments and representatives of some control functions, as required.


The Risk Management Committee reports to the Managing Director and is responsible for overseeing the implementation of ADIA’s risk management framework. It comprises members of the Investment Committee.


The Investment Guidelines Committee assists the Investment Committee with achieving consistency and clarity in investment guidelines.

The Management Committee reports to the Managing Director and is responsible for reviewing and providing recommendations on non-investment and organisational related matters including ADIA-wide planning, department planning and the ADIA budgeting process.

Principle 18

18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.

18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.

18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.

18.3. A description of the investment policy of the SWF should be publicly disclosed.

With a long tradition of prudent investing, ADIA's investment decisions are based solely on its economic objectives of delivering sustained long-term financial returns.

ADIA uses both active and passive/indexed strategies as part of the asset management process. ADIA's assets are managed by internal and external investment managers, who are subject to ADIA's risk and investment guidelines. ADIA regularly reviews the ongoing performance of its internal and external managers. Each of the internal and external managers has been selected by ADIA for their experience and track record. 

The Strategy & Planning Department (SPD) plays a central role in ADIA’s investment process, with responsibility for developing, maintaining and dynamically reviewing ADIA’s asset allocation across more than two dozen asset classes and sub-categories. In doing so, SPD adds value by diversifying across a rich set of asset classes, using weightings based on ADIA’s long-term view of the world.

Through an ongoing assessment process, ADIA’s investment strategies are continuously streamlined to enhance performance. This includes proposing new strategies to expand ADIA’s investable universe and systematically identifying opportunities for generating excess returns, while maintaining ADIA’s target risk profile.

In accordance with ADIA’s prudent governance structure, SPD’s recommendations are submitted to the Investment Committee and ultimately the Managing Director. If approved, funds are allocated to the respective investment departments, which are responsible for implementation in line with their mandates.

To achieve its long-term objectives, ADIA must be able to execute on its desired asset allocation in a timely fashion, in size, while minimising transaction costs. It is for this reason that slightly less than half of ADIA’s portfolio consists of index-replicating, or passive, strategies within quoted markets. This is offset by skilfully designed, actively managed investments across asset classes, in areas with the genuine potential to generate market outperformance, or alpha, over the long term.

We recognise that a structured yet flexible approach is needed to ensure opportunities and trends can be captured as they arise. On a macro level, this has enhanced the organisation’s ability to take a globally strategic view of opportunities, both across and within asset classes. It has also enabled ADIA to become increasingly tactical and opportunistic where potential opportunities and trends arise.

By making continuous enhancements, ADIA has built an investment strategy that is not simply based on asset class or geographic allocations but one that is both robust and increasingly focused on return drivers. This allows for a sophisticated approach that can be more granular in nature and provides us with the ability to focus on sector-based or thematic investments with attractive risk and return characteristics.

ADIA’s guidelines, which help ensure that investment department’s portfolios are diversified, include limits on the size of the investment, the geographical and sector concentrations and what other types of exposures can be taken.

In addition, the Evaluation & Follow-Up Division advises and supports the Managing Director, and the Investment Committee.

The Division provides independent analyses and evaluations on investment and asset allocation proposals generated by ADIA’s investment departments and Strategy and Planning Department prior to their presentation to the Investment Committee. It also evaluates and prepares periodic reports on investment departments’ performance, strategies, risk profile, structure and resources, and on ADIA’s overall investment performance including the impact of its asset allocation decisions.

Evaluation & Follow-Up’s role also involves reviewing and providing recommendations on ADIA-wide strategic, organisational and governance matters.


In total, around 50% of ADIA’s assets are managed externally in areas including equities, fixed income, money markets, alternative investment, real estate, infrastructure, and private equities. We engage managers across the risk spectrum, from index-replicating to actively managed mandates, and typically tailor each fund to our specific needs and internal guidelines.

ADIA’s alpha-seeking managers operate in a wide variety of geographies and asset classes and employ a comprehensive array of strategies to meet their objectives. Our goal is to ensure that we employ only those managers in whom we have the highest level of conviction operating across structurally attractive geographies and asset classes, who combine to produce the levels of alpha we demand from active management.

ADIA uses external managers to complement its internal capabilities in the management of investments across the various asset classes and geographies.

In recognition of the important role they play, we devote time and effort to the process of recruiting and monitoring external managers. Our CISD due diligence teams begin by creating a

long list of potential managers in any given asset class and strategy, sourced from extensive internal databases. We then analyse these managers on the basis of ADIA’s “Four Ps Framework” – Philosophy, Process, People and Performance.

This process involves discussions and face-to-face meetings with managers before we create a short-list, allowing us to build a well-rounded understanding of their backgrounds and potential to deliver sustainable outperformance against their mandates.

The teams then gather and analyse relevant data to back up their qualitative views on the attributes of each manager. In this way, we set clear expectations of the behaviours of each external manager and are able to put their performance in context against differing market conditions.

ADIA has developed robust systems and processes over many years that require our external managers to remain compliant with their agreed investment and operating parameters. Once appointed, teams in each department continuously monitor our

managers, analysing portfolio performance, positions, risk exposures and investment styles, and hold regular follow-up meetings with them, both on-site and in their offices.

These teams are supported by the Internal Audit Department, Evaluation & Follow-Up Division, Operations Department and Central Investment Services Department, in coordination with ADIA’s custodian banks.

The use of external managers also ensures that ADIA retains up-to-date knowledge and is kept abreast of developments across the investment industry. While we have a clear focus on investment performance, our preference is to have long-term relationships with our external managers.