Family office portfolios moved back to a greater balance: UBS Global Family Office Report 2024

ZURICH: UBS today published its Global Family Office Report 2024, with insights from 320 single family offices across seven regions of the world. Representing families with an average net worth of US$2.6 billion and covering over US$600 billion of wea...

ZURICH: UBS today published its Global Family Office Report 2024, with insights from 320 single family offices across seven regions of the world. Representing families with an average net worth of US$2.6 billion and covering over US$600 billion of wealth, it confirms the report as the most comprehensive and authoritative analysis of this influential group of investors.

‘Our 2024 report shows that family offices followed through on the plans for material shifts in strategic asset allocation foreseen in 2023’s report. By increasing weightings in developed market fixed income, they reintroduced greater balance between bonds and equities,’ said George Athanasopoulos, Head of Global Family and Institutional Wealth, Co-Head of Global Markets at UBS.

Benjamin Cavalli, Head of Global Wealth Management Strategic Clients at UBS, highlighted, ‘The enlarged and globally comprehensive dataset allowed us to deepen our analysis and gain insights on how family offices’ operating businesses impacted their asset allocation.
This enables us to provide them with tailored findings and advice.’

The 2024 survey showed that family office portfolios moved back to a greater balance between bonds and equities. Possibly adjusting for a world of moderating inflation and declining policy rates, this change appears to reflect elevated bond yields, and it is consistent with the moves foreshadowed by last year’s report.

On average, family offices have kept their largest regional allocations in North America (50%), over a quarter (27%) in Western Europe, and 17% in either Asia-Pacific or Greater China. Looking ahead, North America and Asia-Pacific (excluding Greater China) are set to be the top destinations of added allocations, with over a third looking to increase allocations to each of these regions over the next five years (38% and 35% respectively).

Just as balanced portfolios appear to be back in favor, so too does active management. Amid rapid technological change, shifting rate expectations and uneven growth, the increased dispersion
of returns offers opportunities for active management. Almost four in 10 (39%) family offices globally state that they are currently relying more on manager selection and/or active management to enhance portfolio diversification, up 4% from 2023. On the alternative investment side, hedge funds are used by a third (33%) of family offices for diversification. From a thematic perspective, generative AI is the most popular investment theme, with more than three quarters (78%) of family offices stating it is likely to be an area of investment in the next two to three years.

Sustainability is becoming an increasingly important topic affecting not just family offices’ investment portfolios, but also the long-term outlook of operating businesses. More than half (57%) of family offices with an operating business are either taking sustainability considerations into account already for their operating businesses or plan to do so in the future. As the topic of sustainability matures, family offices need more information
and advice. Better data analytics to measure the impact of investments and/or business operations would help in achieving sustainability and/or impact goals, according to 37% of respondents.

Compared to their global peers, Middle Eastern family offices have, on average, the highest allocations to real estate (15%) and use high-quality short duration fixed income to enhance portfolio diversification less than their global peers (10%). In the next 12 months they are most concerned about a major geopolitical conflict (68%) and over the next five years they are most worried about a financial market crisis (57%).

Source: Emirates News Agency