Fin Alternatives: The average family office has US$890 million in assets and made a 9% return on its investment portfolio in 2013, according to new research from UBS/Campdon Wealth Research.
The survey polled principals and executives of 205 family offices with at least US$100 million in assets under management (together managing US$180 billion) in Europe, North America and Asia-Pacific.
Among the survey highlights was the revelation that smaller family offices (under US$1 billion) spend more on outsourcing to specialist firms than do their larger counterparts (58 basis points on average compared to 35 basis points) but those offices that outsourced investment management were “the least likely to outperform against investment benchmarks. ”
The survey also found that offices with “high levels of beneficiary involvement” pursued more aggressive, growth strategies; paid higher costs; and achieved lower performance against benchmarks.
And family offices don't necessarily keep their investing all in the family—four-fifths co-invested in 2013, with office-to-office deal size averaging US$119 million and syndicated deal size averaging US$76 million.
The average family office spent 86 basis points on operating costs, of which investment activities accounted for almost half.
And then there's philanthropy: One-third of family offices have endowments of at least US$10 million, many focused on healthcare and education. Giving in Asia-Pacific has increased 10% since last year, with 77% of the region's family offices reporting some sort of philanthropic undertaking. European family offices have the largest philanthropic endowments but almost a third (more than the other regions combined) don't manage their family's philanthropy.
As for objectives, intergenerational wealth management is by far the most important, with consolidation of accounting and tax functions second and family unity third.
“While performance lagged slightly among developing economy family offices, our research attributed this largely to holdings of developing-economy equities and fixed income, which last year were surpassed by the meteoric rise of developed-economy equities. Despite these differences, the research revealed significant similarities globally in family office investment management structures, manager selection and oversight as well as reporting requirements,” said Dominic Samuelson, Chief Executive Officer of Campden Wealth, in a statement.