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ADIA, the $1.1trn Abu Dhabi sovereign wealth fund, is planning to funnel billions more into hedge funds after highlighting strong performance in the sector.
Its exposure range to financial alternatives including hedge funds, as opposed to private markets, is rising from 5-10% to 7-12%. ADIA struck a notably positive strong tone on hedge funds in its newly released annual report.
‘Agile’ investments deliver
“The hedge fund industry delivered another strong year in 2025, despite periodic market volatility that reinforced the importance of portfolio diversification and tactical positioning,” according to the report.
“Navigating these conditions required managers to be agile, as different strategies dominated performance at different times.”
Hedge funds contributed “strong absolute returns to ADIA’s total portfolio in 2025, with minimal correlation to equity market movements,” the report added.
“The department’s thoughtfully constructed diversification proved its value: strategies that led performance in the early months were complemented by others that excelled mid-year, while the year-end saw positive contributions across the entire platform.”
Managed account use increases
ADIA has been expanding its use managed account platform after buying a minority stake in Innocap last year.
“The platform onboarded additional existing relationships while also directly integrating some new managers, enhancing both capital efficiency and operational flexibility.”
The increased exposure could be worth billions in new hedge fund allocations by ADIA will plans to “continue to build in 2026 on established partnerships with top-tier managers while actively pursuing opportunities to access top talent and innovation across the hedge fund landscape.”