Family Offices in North America Take Steps to Weather Short-Term Volatility

• Average investment returns stood at 5.9 percent for 12-month period, beating the global average by 0.5 percent
• Over half (55 percent) of family offices anticipate a market downturn by 2020
• An overwhelming majority (94 percent) see US/China relations as having major economic implications by 2020
• North Americans are less concerned about climate change than their global counterparts, yet over half believe that most family offices will engage in sustainable investing by 2022

New York, September 24 2019 – UBS, in partnership with Campden Wealth Research, has today launched its annual report on family offices. The Global Family Office Report 2019 surveyed principals and executives in 360 family offices around the world, with an average of USD 917 million in assets under management. 36 percent of family office respondents were based in North America.

The average North American family office portfolio delivered a 5.9 percent return*

North American investment returns outperformed Europe (4.3 percent), but fell short of Asia-Pacific and Emerging Markets (both returning 6.2 percent).

Developed market equities produced an average return of 2.9 percent for North American family offices. Developing market equities returned -1.9 percent.

Private equity fared the best of all asset classes for family offices in North America, achieving an average return of 16 percent for direct investments and 12 percent for funds-based investing. Real estate also performed well with a return of 11 percent.

John Mathews, Americas Head of Private Wealth Management & UHNW, UBS Global Wealth Management, said:

“While the uncertainty in the markets hasn’t slipped from their purview, family offices are acting with future generations in mind and remain committed to longer-term investments. They’re targeting direct investments in specific asset classes such as real estate or private equity where they can leverage their business-building expertise and exert more influence.”

Dr. Rebecca Gooch, Director of Research, Campden Wealth said:

“Family offices have been navigating volatile markets, and this is reflected in disappointing investment returns across most asset classes. The notable exceptions were illiquid investments, which continued to perform well. Real estate and direct private equity actually exceeded the high expectations that were set in a buoyant market at the start of last year.”

US/China relations headlines economic risks seen by North American family offices

Ninety-four percent of North American family offices polled believe that US/China relations will have major economic implications, while 55 percent are expecting a market downturn to commence by 2020.

In response, family offices are beginning to consider taking defensive positions including moving from equities to illiquid investments, including direct private equity.

Globally, nearly half (45 percent) of those surveyed are re-aligning their investment strategy to mitigate risk, while 42 percent are doing so to take advantage of opportunistic events. Another two-fifths (42 percent) are increasing their cash reserves, while a fifth (22 percent) are reducing leverage exposure within their investments.

Dr. Rebecca Gooch said:

“Family offices are cautious about geopolitical tensions, and there is a widespread sense that we’re reaching the end of the current market cycle. 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.”

Scepticism about the impact of climate change does not detract from enthusiasm for sustainable investments

In a significant divergence from the global norm, a minority (36 percent) of North American family offices believe that climate change is the single greatest threat to the world. This is a stark contrast with family offices in Europe (68 percent) and Asia-Pacific (61 percent).

Despite this view, over 54 percent of North American family offices believe that the majority of family offices will engage in sustainable investing by 2022, and a majority (66 percent) believe there is now an ample supply of opportunities to invest in green technology.

These values are reflected in the growing popularity of sustainable and impact investing strategies. 1 in 4 (25 percent) North American family offices now engage in sustainable investing, with 21 percent having made impact investments. While these numbers are lower than their global counterparts, it is expected to rise within the next five years.

Judy Spalthoff, Americas Head of Family Advisory and Philanthropy Services, UBS Global Wealth Management, said:

“When family offices invest, they have the ability to set powerful agendas. One of their most powerful areas of influence lies in sustainable investing, an area where family offices have continually increased their allocations over the past year. Sustainable investing is no longer viewed as a ‘side project’ but an investment tool that can generate good returns – and family offices are prioritizing accordingly.”

* Respondents were asked for their average performance for the 12 months prior to their participation in the survey during Q1 and Q2 2019. 

About UBS

UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. UBS' strategy is centered on our leading global wealth management business and our premier universal bank in Switzerland, enhanced by Asset Management and the Investment Bank. The bank focuses on businesses that have a strong competitive position in their targeted markets, are capital efficient, and have an attractive long-term structural growth or profitability outlook.

 UBS is present in all major financial centers worldwide. It has offices in 52 countries, with about 34% of its employees working in the Americas, 34% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 14% in Asia Pacific. UBS Group AG employs approximately 61,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).

About UBS Global Family Office Group

A joint venture between UBS’s Investment Bank and Global Wealth Management divisions, the Global Family Office Group focuses on servicing our most sophisticated clientele with institutional-like profiles and requirements. It offers holistic advisory services, direct access to UBS cross-divisional expertise across the globe, institutional business opportunities and an extensive peer network with dedicated teams in New York, London, Zurich, Geneva, Hong Kong and Singapore.

About Campden Wealth

Campden Wealth is a family-owned, global membership organisation providing education, connectivity, research and networking opportunities to families of substantial wealth, supporting their critical decision-making, helping to achieve enduring success for their enterprises, family offices and safeguarding their family legacy.

Campden Research supplies market insight on key sector issues for its client community and their advisers and suppliers. Through in-depth studies and comprehensive methodologies, Campden Research provides unique proprietary data and analysis based on primary sources.

Campden Wealth publishes the leading international business title CampdenFB, aimed at members of family-owned companies in at least their second generation.

Campden Wealth owns the Institute for Private Investors (IPI), the pre-eminent membership network for private investors in the United States founded in 1991, and the Campden Club, a global membership network for families and family office executives. Campden further enhanced its international reach with the establishment of Campden Family Connect PVT. Ltd., a joint venture with the Patni family in Mumbai in 2015.

For more information: www.campdenwealth.com
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