The explosive growth of hedge funds over the past several years has been driven, in no small part, by sovereign wealth funds. But the world’s largest such fund is reportedly slashing its exposure to the asset class.

The Abu Dhabi Investment Authority, which has some US$650 billion in assets, is boosting its index fund investments at the expense of alternative investments, BusinessWeek reports. ADIA has reportedly halved the number of hedge funds it invests in. The fund now has about 34% of its portfolio in alternative investments.

BW says the move to passive investments is in response to disappointing returns on the part of hedge funds.

“AIDA is keen on identifying real management skills and real talent, and is not prepared to pay the usual fees charged by hedge funds for strategies that can be replicated in an index,” Saeed Mubarak al-Hajeri, AIDA’s executive director, told BW.