ADIA at 40: Mohamed Ahmed Al Qamzi is the man tasked with outperforming market indexes

Since joining Adia in 1996, Mohamed Ahmed Al Qamzi, the Emirati who heads the Abu Dhabi Investment Authority’s (Adia) in-house team that invests directly into global stock markets, has seen global share markets transformed by the volume and speed of information.

For the man tasked with outperforming market indexes – achieving “alpha” in financial parlance – this huge increase in tradable information is the latest in a long line of market developments that require his Internal Equities Department to constantly evolve.

“The biggest challenge that we have today, that wasn’t there back when I first joined, is the amount of information that we have at our fingertips,” Mr Al Qamzi says. “The sheer volume of information is huge; it’s delivered to people all over the world in micro-seconds, so how do you extract the benefit of that information to outperform the market?”

In recent years, the department has added several new teams to identify and manage investments in different parts of the world, from the Far East to Latin America and, most recently, a US team whose challenge is to outperform the world’s most efficient market. It has also created two teams with more flexible mandates to ensure it does not miss out on attractive opportunities that fall outside the remits of its geographical teams.

In the mid-1990s, when Mr Al Qamzi completed his university studies and joined Adia, the world and the markets were very different.

Adia had long-established an ability to internally-manage a portion of its equity investments, rather than rely solely on external asset managers, but both functions were housed together in regionally focused departments, a structure that hindered collaboration and knowledge sharing.

In early 2008, at a time when many stocks around the world were plateauing, a decision was taken to separate all of Adia’s internal teams focused on equities from those responsible for selecting and overseeing its multitude of external managers.

Mr Al Qamzi, who took over as the Executive Director of the Internal Equities Department at Adia last year, after serving in a senior management position, now oversees 10 teams. Of these, two invest globally and the remaining eight are split into regional or, in specific cases, country teams such as the United States, United Kingdom, China and India.

Each of his teams are headed by a portfolio manager and sector specialist who take a so-called “bottom up” approach to picking stocks, looking at each company on its individual merit and potential to be mispriced by the market. Mr Al Qamzi keeps close tabs on the day-to-day management of the department, which has strict guidelines and benchmarks to beat.

Against a backdrop of perpetual change, one constant for Mr Al Qamzi’s team is a commitment to fundamental-based investment decisions.

“We invest on fundamentals and that requires strong, robust analysis. I will accept people making a wrong decision that is based on solid analysis, but not somebody making the right choices based on incorrect analysis,” Mr Al Qamzi says.

The market-beating returns he and his predecessor have garnered in recent years have not gone unnoticed, resulting in additional funds being allocated to his department and allowing him to grow the team. Adia does not disclose the amount of money it manages and prefers to keep details of most of its investments under wraps to give it a competitive edge. Total returns for a 20 and 30-year period can be estimated and there is a broad outline of the asset classes in which it invests.

While more than half of Adia’s assets remain in passively managed investments that track the performance of the overall market, this percentage has dropped in recent years as the fund has built up its internal expertise and teams such as Mr Al Qamzi’s have proven their ability to outperform.

Even so, active investing carries risks and things have not always gone according to plan, the most publicised example being Adia’s US$7.5 billion investment in Citigroup in late 2007, shortly before the financial crisis hit.

Mr Al Qamzi says he travels the world with his teams to keep up to date on the companies the department is invested in, meeting management and getting a deeper understanding of conditions on the ground, and also to search for talent to bring back to Abu Dhabi. That expertise, he says, is being blended with Emirati hires to develop a department he sees as vital in growing financial market skills among the local population.

“You cannot be conservative, but you do have to be prudent. If you are conservative, you will lose opportunities – and when you are considering the wealth of our next generation, you have to take decisions to prosper.”

As a graduate of Adia’s rigorous scholarship programme and with two decades of experience under his belt, the executive says he is now keen to play his part in getting more Emiratis on board. While Adia started as being run almost exclusively by Emiratis in 1976, its headcount now boasts more than 60 nationalities.

“Having built a sophisticated internal capability, now we have the chance to develop local talent. Analysing markets, looking at individual companies and making decisions that deliver outperformance, these are the experiences that will build financial skills for the next generation,” Mr Al Qamzi says.

The pitch, he reckons, will not be difficult.

“To put it frankly, who does not want to join Adia?” he says.

“The work experience, the learning, the development on offer – they are second to none.”

mkassem@thenational.ae

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