June 18, 2025 - A decade ago, the combined value of all sovereign wealth funds (SWFs) worldwide stood at $1 trillion. Today, that figure has surged to $13 trillion, representing 6% of global capital and capturing a growing share of media attention. While SWFs remain just one of many alternative capital sources, their rising influence has prompted investment leaders and fund managers to ask: “Do we need a sovereign wealth fund strategy?”

This article delves into the purpose behind these funds, with a spotlight on Abu Dhabi’s $1.7 trillion SWF. We examine the opportunities it presents, the priorities of its decision-makers, and key considerations for fund managers seeking tax-efficient jurisdictions or contemplating relocation.

Sovereign Wealth Funds: Rooted in Natural Resources

A sovereign wealth fund (SWF) is an investment fund managed by a government agency on behalf of a nation or sovereign state. The world’s largest sovereign wealth funds are often born from natural resource wealth. With the notable exception of China, most derive their capital from budget surpluses generated by the export of oil, natural gas, and minerals. Norway, home to the largest SWF, exemplifies this model, as do other resource-rich nations like Kuwait, Qatar, and the United Arab Emirates. Even smaller nations, such as Kiribati in the Pacific Islands, have established funds using proceeds from phosphate mining.

A common objective among these funds is to diversify national wealth beyond finite natural resources. Many, including those of Saudi Arabia, Abu Dhabi, and Qatar, allocate roughly one-third of their portfolios to sustainable energy and climate-related projects, often with a globally diversified investment strategy.

SWFs vary widely in transparency and governance. As state-owned investment vehicles, they reflect the priorities and political dynamics of their respective governments. Changes in leadership can shift investment strategies, and the involvement of political figures can sometimes introduce conflicts of interest or politically driven decision-making.

In 2008, many SWFs came together under the guidance of the International Monetary Fund to adopt the Santiago Principles — a set of 24 voluntary guidelines promoting fiscal responsibility and transparency. Signatory funds commit to sound governance and public disclosure of their activities.

Abu Dhabi: A Strategic Base for Capital, Residency, and Growth

For asset managers, family offices, and management companies seeking a stable, tax-efficient, and globally connected base of operations, Abu Dhabi is increasingly hard to ignore. With a $1.7 trillion sovereign wealth fund, a robust financial ecosystem, and a government committed to economic diversification, Abu Dhabi offers both capital access and a compelling lifestyle proposition.

A Magnet for Financial Services Talent and Firms

Abu Dhabi is actively encouraging financial services professionals and firms to establish a presence in the emirate. The reasons are compelling:

Tax Efficiency: The UAE offers zero personal income tax and a flat 9% corporate tax on profits above approximately $100,000 USD (with exemptions from corporate tax on personal investment income / real estate investment income). Free zones such as Abu Dhabi Global Market (ADGM) offer even more favorable conditions, including zero corporate tax and streamlined regulatory frameworks.

Lifestyle and Safety: Abu Dhabi ranks high on global peace and safety indices, offers world-class infrastructure, and provides a high standard of living, making it attractive for professionals and their families.

Talent and Infrastructure: A growing pool of financial professionals, supported by government initiatives in education and innovation, ensures access to skilled talent.

Ease of Doing Business: Ranked 16th globally by the World Bank, the UAE offers a business-friendly environment with efficient regulatory processes and strong legal protections for investors.

Strategic Location: Situated between East and West, Abu Dhabi provides access to markets in Asia, Europe, and Africa, making it an ideal hub for regional and global operations.

Capital Raising Opportunities

Abu Dhabi is a capital-rich environment with multiple avenues for financial services firms to raise funds:

Abu Dhabi Investment Authority (ADIA): The UAE’s primary sovereign wealth mechanism manages $1.7 trillion in assets under management. It is guided by its Vision 2030 plan which aims to achieve economic, social, and environmental development for the country.

As a member of the International Forum for Sovereign Wealth Funds (IFSWF) and an adherent to the Santiago Principles, ADIA provides some public insight into its investment classes and regions. According to its website, ADIA allocates 45-60% of its portfolio to North America, 15-30% to Europe, 10-20% to emerging markets, and 5-10% to Asia.

Like many sovereign wealth funds, ADIA invests on long timelines and will consider projects with 30-year returns. In the past, it has proven interest in real estate, tourism, healthcare, education, financial services, telecommunications, and high-tech industries, in developed nations around the world. In many ways, the goals of ADIA’s international investments mirror the UAE’s domestic goals: It aims to make investments that help it accumulate expertise and exposure to develop those same non-oil sectors back home.

Private Capital and Co-Investment: Beyond ADIA, Abu Dhabi is home to a growing number of private investors, sovereign entities, and family offices seeking co-investment opportunities in global and regional markets.

Vision 2030 Alignment: Firms that support the UAE’s Vision 2030 — focused on innovation, sustainability, and economic diversification — are more likely to attract institutional interest and government support.

Final Thoughts

Before diving into the specifics of Abu Dhabi, UAE, it’s important to carefully consider the implications of establishing or relocating a business entity there. Engaging a qualified advisor is strongly recommended, particularly one with expertise in audit, advisory, accounting, international and domestic taxation, corporate finance, and risk management.

For deeper insights into business opportunities, tax landscape, and Abu Dhabi’s regulatory environment, or to discuss the broader implications of operating in the region, please reach out to Fernando Moreno at fmoreno@citrincooperman.com.