#AbuDhabi’s ADIA Boosts Hedge Fund Exposure Via Managed Accounts - Bloomberg

Abu Dhabi’s ADIA Boosts Hedge Fund Exposure Via Managed Accounts - Bloomberg

The $1 trillion Abu Dhabi Investment Authority has ramped up its use of separately-managed accounts to deploy large chunks of money across dozens of hedge funds, according to people familiar with the matter.

Abu Dhabi’s biggest wealth fund has boosted its hedge fund exposure through the increasingly-popular mechanism to about $40 billion this year, one of the people said, asking not to be identified because the details are private.

That’s billions of dollars more than last year, and comes as ADIA looks to raise its exposure to alternative investments, the people said. It continues to deploy capital to hedge funds that’s co-mingled with other investors, according to the people.

A representative for ADIA declined to comment.

Separately-managed accounts, or SMAs, allow large investors ownership and control over their allocation to hedge funds and have emerged as a popular way to quickly deploy cash. They can offer discounted fees as well as efficient use of capital, as investors can apply leverage.

SMAs have grown in popularity in recent years as both traditional investors and multistrategy hedge funds like Millennium Management and Qube Research & Technologies use them as a gateway to fork out cash to external traders.

They’re now offered by roughly six in every 10 hedge funds, of which 8% launched their first SMA last year, according to a report by Goldman Sachs Group Inc.

ADIA’s move follows its decision earlier this year to buy a minority stake in Canada’s Innocap Investment Management Inc. that facilitates investment through SMAs. The fund has historically been among the biggest backers of hedge funds and allocated capital to Bobby Jain’s $5.3 billion startup.

It was set up in 1976 to invest Abu Dhabi’s surplus energy revenues, diversify its economy and prepare the United Arab Emirates’ capital for life after oil. ADIA is one of several Abu Dhabi sovereign entities that together control almost $1.7 trillion in assets.