PHOTO CREDIT TKWealth estimates that around 7,300 single-family offi ces are in
operation worldwide, with total estimated fortunes of $9.4 tril-
lion. The largest concentration (42%) is in North America, 32%
in Europe, 18% in Asia-Pacifi c and 8% in the emerging markets
of South America, Africa and the Middle East.
As fi nancial markets recover from the selloff , these wealthy
families are willing to put their liquidity to work. “They have
the appetite. They want to capitalize and not miss an opportu-
nity,” says Munish Dhall, deputy head of GFO Americas, UBS
Global Wealth Management.
The shift toward real assets is likely to continue, as an uncer-
tain post-Covid period approaches. “Outside of embracing risk-
mitigation tactics, diversifi cation has proved helpful, particularly as
liquid investments, such as equities, have fallen,” Gooch says. “Real
estate, as a longer-term illiquid investment, has proven attractive.”
Almost half (45%) of family offi ces told UBS analysts in May
that they were planning to raise their allocation to real estate.
Current lower valuations are also boosting appetite for venture
capital, says Gooch.SUSTAINABLE INVESTING
Sustainable and impact investing are also drawing attention
during the global health crisis. Almost three quarters (73%) of
wealthy families already invest in some sustainable assets, UBS
says, and more than a third plan to make most of their portfolios
sustainable in the next fi ve years.
“At present, roughly one in three family offi ces engage in sus-
tainable investing,” says Gooch. “However, the health crisis has
led many to reevaluate their investment views and may lead to a
widening of family offi ces’ risk assessment to include more envi-
ronmental, social and governance [ESG] factors.” Private equity,
invested either directly or through funds, is one way for families
to put some muscle behind their social concerns. Measuring the
return on these investments remains a challenge, however.
In the geography of wealth allocation, developed economies
will continue to dominate, with nearly half of family offi ces
looking to raise their allocations to equities in these markets,
according to UBS. In particular, interest in Europe ticked up
during the pandemic, as some sectors in the US market reached
full valuation, says Reinhardt Olsen, head of GFO Americas at
UBS Investment Bank. ■Real Wealth
The world’s richest families are
looking to real estate and private
equity as they fl esh out post-
Covid investment strategies.S
ince the 2008 crisis, wealth managers for ultrarich
families have learned to navigate turbulence and pre-
serve multigenerational fortunes. Thanks to strategic
planning, March’s steep dive in global stock markets
dented neither their appetite nor their wealth.
More than three quarters (76%) of 121 single-family offi ces
with an average family wealth of $1.6 billion polled by UBS
in May said their portfolios performed in line with or above
their targets in the fi rst fi ve months of the year. The maximum
drawdown was around 13% on average, according to the UBS
“2020 Global Family Offi ce Report.”
“They kept a fairly level head in how they look at the mar-
ket,” says Bill Sullivan, president of the Family Offi ce Exchange
(FOX), an association of around 500 single-family offi ces across
20 countries with an average net worth per family of $500 mil-
lion. According to the UBS report, nearly two-thirds (65%) of
family offi ces proactively traded up to 15% of their portfolios.
Despite some rebalancing, the ultrawealthy didn’t make signif-
icant adjustments in their portfolios after the Covid-19 crisis hit.
During the selloff , they increased their cash reserves and bought
gold to protect their fortunes from market fl uctuations.“We
haven’t seen huge changes in their investment,” says Sullivan.“We have certainly seen some de-risking of their portfolios. We
have seen a search for some liquidity, a little bit of a shift out of
public equities, but that was already happening.”
Almost three-quarters of family offi ces polled by the FOX said
they do not intend to defer or cancel their planned investments,
while UBS reports that 67% of its respondents say their mid-
term view has not changed. “They have preferred to stick with
their current allocations and take time to digest how the market
will evolve post-Covid-19 and impact their existing portfolios,”
says Rebecca Gooch, director of research at Campden Wealth,
a global research organization for wealthy families. Campden PHOTO CREDIT TK“They kept a fairly level head in
how they look at the market.”
—Bill Sullivan, Family Offi ce Exchange34 | Global Finance | September 2020PRIVATE BANKING
FAMILY OFFICES | By Antonella Ciancio