One of the planet’s most influential pools of capital just reshuffled its deck. The Abu Dhabi Investment Authority published its 2025 annual review, revealing that the sovereign wealth fund meaningfully increased its target allocations to both private equity and hedge fund strategies while pulling back from real estate.
ADIA’s private equity target range climbed to 15%-20%, up from its prior band of 12%-17%. Financial alternatives, a category that encompasses hedge funds and absolute-return strategies, saw its target lifted to 7%-12% from 5%-10%.
What changed, and what got cut
The gains for private equity and hedge funds came at real estate’s expense. ADIA trimmed its real estate target range to 2%-7%, down from 5%-10%. The fund noted that its absolute dollar exposure to property remained stable, meaning the percentage shift reflects the growth of other buckets rather than a fire sale of buildings.
On the management side, 63% of ADIA’s assets were run internally in 2025, with the remaining 37% handled by external managers.
Performance tells the story
ADIA reported 20-year annualized returns of 6.6% and 30-year annualized returns of 7.2% for the period ending in 2025. Both figures represent improvements over the prior year’s readings of 6.3% and 7.1%, respectively.
Managing director Sheikh Hamed bin Zayed Al Nahyan credited the strong performance of equities in 2025, noting that markets held up despite tariff wars and geopolitical tensions. He pointed to artificial intelligence as a stabilizing force, suggesting that AI-driven productivity gains helped offset macro headwinds.
But the optimism came with a caveat. Sheikh Hamed flagged the potential risks from rapid technological change and policy shifts expected in 2026, a nod to the fact that the same AI tailwinds powering markets could create new forms of volatility if adoption outpaces regulatory frameworks.