Lid is lifted on world's family offices in first ever major global survey
The first ever global study of family offices is released today, providing new insights into a growing, but notoriously discreet, sub-section of the ultra-high net worth wealth sector.
The average family office has total assets of $890 million, the research from Campden Wealth Research in partnership with UBS found. The total sample size surveyed represented $180 billion in private wealth.
Intergenerational wealth management was found by the report, the Global Family Office Report 2014, to be the most important objective of family offices, followed by the consolidation of accounting and tax functions.
The report also showed family offices of developed countries outsourcing specialised services, such as tax planning.
Andrew Porter, director of Campden Wealth Research, said: “The Global Family Office Report is the largest family office ever conducted, with over 200 principals, beneficiaries and executives participating.
“By focussing on the relationship between office structure and investment strategy, as well as the ways family involvement affects them, this report provides a comprehensive analysis of the current, global family office environment.”
The report found these investment vehicles for the super rich are reaping above market returns, with 2013 performance averaging 9%.
The pioneering report found this above par performance was linked to a substantial holding of developed-market equities and real estate, which compromised almost a third of portfolios.
Another key finding of the report was a high degree of co-investment between family offices around the globe, with almost four-fifths participating in office-to-office deals, which averaged around $76 million annually for syndicated deals, and $119 million for private equity deals.
Regionally, offices in Asia-Pacific were most likely to co-invest, followed shortly after by developing economy family offices. European and North American family offices were less likely to conduct direct investments, though data suggests this will change in future.
The report also revealed that environmental, social, and corporate governance issues were not prevalent in family offices but did have an impact on asset allocation. Family offices that considered these governance issues when choosing investments were least likely to underperform.
Porter says philanthropy has always played a key role in family office responsibilities but there is an increasing trend towards making impact through direct investments.
“What we discovered was that offices are beginning to incorporate environmental, social, and corporate governance considerations into investment portfolios, but not at the expense of philanthropic pursuits. Rather, family offices in Europe and Asia-Pacific are increasing allocations to philanthropy, while offices worldwide report plans to increase allocations to philanthropy in the coming years.”
The study, which began in the winter of 2013, surveyed family office leaders and executives in over 40 different countries and features the largest sample of family offices respondents ever assembled.
Philip Higson, vice chairman of UBS Global Family Office Group, believes the report is one of the most groundbreaking family office studies ever committed to paper.
“This Global Family Office Report is the definitive work on family offices to date and … against initial expectations, highlights a high degree of common ground across family offices globally. I believe [the study] will provide a sound basis for benchmarking and sharing best practice,” he said.
Dominic Samuelson, chief executive officer of Campden Wealth, said: “Family offices are not as different as one might believe. While performance lagged among developing economy family offices, our research attributed this to holdings of developing-economy equities and fixed income.”
For further information regarding the Global Family Office Survey 2014 please click here.