Having “misjudged” some key market trends last year, when these family offices said they were focusing on growth investments, “they have reverted to wealth-preservation strategies as their primary objective” now, the UBS/Campden Wealth European Family Office Survey says, in a summary of its findings.
At the same time and seemingly contradictorily, though, the family offices reported “a tendency for increased allocations to higher-risk asset classes in the next three years”, as “emerging markets and equity investments are seen as replacing cash and bonds within that time horizon”.
The report, carried out for UBS by London-based Campden Wealth, is the fifth in a series that is aimed at identifying the key issues facing single -and multi-family offices, and providing data against which individual offices might evaluate their own businesses and strategies.
Targets missed ‘by wide margin’
The family offices surveyed registered their worst performance in the year through to the middle of 2012, “and missed by a wide margin their targets for generating the net return required in order to preserve wealth across generations,” the report’s author, Simon Murray, noted.
“While SFOs achieved a return of 3.6%, MFSs achieved 2% – against respective targets of 8% and 5%,” Murray said.
Even so, one sign of the times, they added, is that “a number of offices that achieved a zero or low positive return from their diversified asset and currency allocation strategies appear to be relatively satisfied with the result”.
Other key findings:
- Family offices in 2012 have been “considerably slower in replacing” their advisers and providers this year than in past years
- Philanthropic investing is becoming more important to families and family offices, noticeable since Campden Wealth first began interviewing family and multi-family offices. Younger members of the families they look after are seen to be driving this trend, Murray noted, adding that MFOs “are also responding to increasing demand for philanthropic services, and at the same time, some are targeting foundations and endowments for new business”
- All types of offices will need to adjust to the “new normal of low or negative economic and investment growth, and more threatening regulatory and tax regimes”
Copies of the report may be obtained by contacting Campden at +44 (0)207 214 0500.
