Global family offices saw a significant boost in their investment performance in 2016 thanks to the bullish run of public and private equities markets, according to a joint survey by UBS and Campden Wealth earlier this year. The survey found that the investment portfolios of global family offices registered an average return of 7% in 2016, a sizable jump from just 0.3% in 2015. North America family offices produced the strongest return of 7.7%, up from 0.3% in 2015.
Asia Pacific (APAC) family offices posted an investment return of 6.7% following a flat performance in 2015. Anurag Mahesh, head of global family office, APAC at UBS Wealth Management, said the gains were mainly driven by “encouraging results” in developed market equities, and of private equities.
Although APAC family offices posted lower returns than their North American counterparts last year, their allocations to private equities and direct real estate investments, of 20.9% and 20.3%, respectively, were higher compared to the global figures, Mr. Mahesh said. The global allocation to private equities was 20.3% and to real estate, 15.8%. Family offices in APAC also allocated 9.9% of their portfolios to emerging market equities compared to the global average of about 7%, he adds.
"In 2016, APAC family offices upped their risk allocation, [resulting] in higher equity allocations and [notably] improved performance” over 2015, Mr. Mahesh noted. According to Mr. Mahesh, APAC family offices are now looking at a variety of sectors including healthcare, education and consumer, and technology, primarily in the US but also in China.
The demographics of family offices in APAC are also changing, as well as making a greater emphasis on sustainable investments. Enrico Mattoli, head of global family office, Greater China at UBS Wealth Management, remarked family offices in Greater China are characterized by younger entrepreneurs, or the so-called “new wealth”.
Interestingly, the survey found that sustainable investments, impact investing, and environmental, social and governance (ESG) criteria have become increasingly important to the “new wealth” holders. “We see younger family members in Asia Pacific bringing in new values focused largely on social and environmental impact,” said Mr. Mahesh.
The findings are based on a survey of 262 family offices worldwide, including 42 in APAC, with total AUM of US$921B. The survey was conducted between February and May 2017.