Family offices develop appetite for risk

Family offices are favouring riskier assets more and more

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Family offices are taking on more risk, placing additional money into equities and holding less in cash, according to the latest UBS/Campden Research Global Family Office Report.

This is shown not only in their investment intentions, where the percentage of family offices following a wealth-preservation strategy has fallen from 26 per cent to 21 per cent, but also in a portfolio shift towards riskier asset categories.

The average family office, which has assets under management of $806m, invested $73m in hedge funds in 2014, primarily in global macro strategies. This asset class is particularly popular with North American and emerging market family office portfolios.

However, while other classes, such as property and private equity, performed well during the same period, the slowdown in equities damped returns. The return on the composite global portfolio of family offices fell from 8.5 per cent in US dollar terms in 2013 to 6.1 per cent in 2014. European family offices performed the strongest, achieving a return of 6.4 per cent.

Globally, family offices are predicted to increase their profile. A rise in the number of ultra-wealthy people and the large anticipated transfer of money from the baby-boomer generation will drive an increase in both single and multi-family offices.

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