Family offices worldwide posted average 12-month returns of 5.4 percent as of the first half of 2019– a significant decrease compared to last year’s 15.5 percent.
Asia Pacific family offices fared slightly better at 6.2 percent, according to a recent survey co-produced by UBS and Campden Wealth. Overall, family offices are increasingly focused on illiquid, long-term investments such as real estate and private equity.
More than half of the family office respondents expected a market downturn to kick off 2020 with 90 percent of APAC family offices highlighting U.S.-China relations as at a major driver of economic development.
«Family offices are cautious about geopolitical tensions, and there is a widespread sense that we’re reaching the end of the current market cycle,» said Dr. Rebecca Gooch, director of research at Campden Wealth. «While the average family office hasn’t made wholesale changes to its portfolio, many have been building up cash reserves and deleveraging their investments in anticipation of disruption ahead.»
Succession Planning
According to Sara Ferrari, head of UBS's global family office group, succession planning is increasingly being prioritized and she observes that more family offices starting earlier.
«Succession often spans a series of complex matters involving business, investments and family relationships,» she said. «Written plans are important, but they should be considered as part of a broader process of preparing the [next generation] to take control. The key is to start early.»
In Asia, close to half of the family offices surveyed had a succession plan already in place. A similar share of respondents believed that there should be an age limit on succession with the average APAC successor being 41 years old.
