Abu Dhabi Investment Authority (ADIA), considered the world's largest sovereign wealth fund, said the global economy still faces 'considerable uncertainty', in its first annual review aimed at enhancing transparency, according to a report which appeared in the Singapore Business Times from Reuters.

The fund, believed to have assets of around US$500 billion to US$700 billion, said the sustainability of a global economic recovery was uncertain as governments were considering rollbacks of stimulus measures.

“Indeed, the timing and nature of exit strategies, will probably dominate the economic debate and outlook for quite some time,” Sheikh Ahmed bin Zayed al-Nahayan, ADIA's managing director, said in the 2009 review. “Considerable uncertainty remains about the outlook for 2010,” he added.

Economic recovery may be slower in developed markets, with higher interest rates and taxes hampering growth, Sheikh Ahmed wrote in a letter published in the first annual review.

The secretive US$3 trillion SWFs, which invest national windfalls for future generations, have faced pressure to open their books and enhance transparency.

Such funds have come under scrutiny as concerns grew in Western capitals that investments were made with political rather than commercial motives.

Leading sovereign funds formed the International Working Group of Sovereign Wealth Funds in 2008, announcing a set of 24 principles and best practices, known as the Santiago Principles.

In a statement, ADIA said the latest initiatives, including a revamp of its website (http://www.adia.ae) with more information, underscores the fund's commitment to the Santiago Principles.

The review provided details about ADIA's 2009 global portfolio which includes investments in more than two dozen asset classes and sub-categories.

The fund – whose assets range from Citigroup bonds to a stake in Britain's Gatwick airport to residential property in major cities – has rarely given details of its investment strategy or investments.

ADIA's funds returned 6.5% on an annualised basis, over a 20-year period, as of December 31, 2009. On the same basis, the fund returned 8% over a 30-year period, it said.

At least 46% of the fund's portfolio in 2009 was allocated to equities, with a minimum of 35% in developed markets and at least 10% in emerging markets.

Government bonds formed at least 10% of its portfolio with a maximum allocation of 20%. ADIA also put a minimum of 5% in alternative investments such as hedge funds in 2009, while private equity was given at least 2%.

North America and Europe accounted for a major chunk of investments, with about 60 to 85% going to the regions. Emerging markets constituted at least 15%.

The report shows that about four-fifths of ADIA's holdings are chosen by outside fund managers. Like many individual investors' retirement funds, ADIA relies on tracking indexes such as the S&P 500 for about 60% of its investments.

In January, ADIA said it still saw big risks in the global economy and that it planned to refine its investment approach to cope with downturns.

The 2009 review did not provide details about the fund's balance sheet or its total assets under management.

Abu Dhabi's funds have been gradually opening up in recent years.

In January, German business daily Handelsblatt published an interview with ADIA's managing director, a member of Abu Dhabi's ruling family, in which he outlined in broad strokes much of the information in the report.

Another far smaller Abu Dhabi fund, Mubadala Development Co, released a detailed financial report – its first – last April. Its 2009 report has not yet been released.