Abu Dhabi Investment Authority (ADIA) has increased its target allocations to both private equity and hedge funds as the roughly $1tn sovereign wealth fund looks to capture opportunities from a recovery in buyout activity and heightened market volatility, according to a report by Bloomberg.

The sovereign investor increased its allocation range for financial alternatives, which includes hedge funds and related strategies, to 7% to 12% from a previous range of 5% to 10%.

Adia also raised its target range for private equity to 15% to 20% of its portfolio, up from 12% to 17% a year earlier, according to its 2025 annual review.

The changes come after a stronger year for private-market exits. Global exit volumes exceeded $1tn in 2025, the first time they had crossed that threshold since 2021, while IPO activity reached its highest level since the 2020-21 boom, according to the review.

ADIA's investment performance also improved, with its annualised return over 30 years rising to 7.2% from 7.1% in 2024. Its 20-year annualised return increased to 6.6% from 6.3%.

The fund reduced its target allocation to real estate to 2% to 7%, from 5% to 10%, although its absolute exposure to the asset class remained broadly unchanged.