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Australia leads Asia-Pacific family office appetite for alternative investments

Asia-Pacific family offices continue to prefer a hands-on role in managing illiquid investments with the region’s families allocating almost a third of their portfolios to direct investment in real estate and venture capital/private equity, led by Australia.

Asia-Pacific family offices continue to prefer a hands-on role in managing illiquid investments, allocating almost a third of their portfolios to direct investment in real estate and venture capital/private equity, led by Australia.

Family offices in Asia-Pacific had twice as much allocated to real estate direct investment (20%) than their North American colleagues and shared the highest allocation (11%) towards direct venture capital/private equity, the Global Family Office Report 2017 (GFOR) found.

Across the six Australian family offices in the study, direct investments in real estate and venture capital/private equity were even higher, rising to 39% of the average portfolio.

This is in line with the region’s preference for growth investment strategies, which saw Asia-Pacific record the second-highest regional investment returns (6.7%), behind North America.

Forty-two family offices from Asia-Pacific participated in the report, with nine family offices based in Hong Kong and 11 in Singapore.

India, Japan, New Zealand, and Thailand also contributed with family offices in the region managing an average of $445 million in assets.

In contrast to their growth outlook, offices in Asia-Pacific held the highest levels of cash (9%) when compared with their global peers (6.6%).

The small sample of New Zealand family offices in the study reported higher-than-average levels of cash (10%), and much higher allocations to developed market equities (38%), than their Asian peers.

The fourth annual report by Campden Wealth, in partnership with UBS, also flagged up issues around succession and costs.

There were notable regional differences in succession preparation with family offices in Asia-Pacific lagging behind other regions as only 13% currently have written plans in place and 19% have no plan at all.

Succession is just one of the topics to be addressed at the 15th annual Asia-Pacific Family Office Conference, on 25-26 October, 2017.

In a repeat of last year’s findings, family offices in Asia-Pacific incurred the largest total operating costs (131.2 basis points), relative to their average AUM—equivalent to almost $6 million for the average family office in the region.

Once investment manager performance and administration fees were excluded from this figure, their operating costs averaged 85.3 basis points.
 

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