Despite a historical slowdown and an ongoing landmark economic transition, the vast majority of ultra-wealthy Chinese families continue to invest with a bright outlook preferring against preservation-oriented strategies.

The vast majority of wealthy families in mainland China invest in growth (44 percent) or balanced (43 percent) portfolios, according to a recent UBS survey focused on family offices and wealth management in the market. Despite ongoing uncertainty locally and globally, just 13 percent of respondents ave adopted preservation-oriented investment strategies. 

The strategy has reportedly boded well with respondents citing an average return from the previous 12 months of 11 percent. Fixed income continues to top the ranks as the favorite asset class, accounting for an average of 22 percent of portfolios. This is followed by private equity (20 percent) – the top-performing asset class for respondents delivering 19 percent returns from direct investments – alongside real estate (17 percent) and public equities (17 percent). Almost all of the respondents (90 percent) consider international investments.

More Long-Termism

The strong focus on growth stands in stark contrast with older, global wealth where only 25 percent stated the same investment preference, the report added. This has traditionally been the case for years due to the relatively high growth rates experienced by the businesses owned by China’s self-made billionaires compared to their global counterparts. 

However, the tide is turning. According to the report, long-term wealth preservation was named as the most important objective (35 percent) for the families surveyed followed by strategic (24 percent) and tactical (18 percent) investment management. 

Investment Returns

«Five years ago, businesses were returning 20-30 percent and families were looking for investment returns of, at least, 10-20 percent,» the report said. «Gradually, however, families are shifting emphasis from growth to preservation.»

The UBS report titled «Chinese Family Office and Wealth Management Report» was based surveys and interviews with 76 family members, senior family office executives and family wealth managers covering families with an average wealth of 6.5 billion yuan ($940 million) and family offices with average assets under management of $600 million.