Key findings:
- APAC family offices recorded strongest performance at 16.4%, driven by equities and private equity.
- Succession planning is a key priority in Asia Pacific at 71%. They either have a succession plan in place or are developing succession plans at the moment.
- Further growth in impact investing expected with 35% of family offices in Asia Pacific currently involved.
Singapore, 1 October 2018 – UBS, in partnership with Campden Wealth Research, has launched its APAC edition of the Global Family Office Report today. The Global Family Office Report 2018 surveyed principals and executives from 311 family offices, with an average Asset Under Management (AuM) of USD 808 million.
53 family offices participated from Asia Pacific this year. The average AUM of APAC family offices is USD 400m.
The key findings
1. APAC family offices has the highest investment performance globally
APAC family offices overtook all other regions to record the highest average performance, reaching 16.4%. This can be attributed to a strong year in developing market equities (14%) and private equity direct investments (15%), with deal values reaching their highest level since the first survey five years ago (both areas where Asian family offices are heavily invested).
Globally, family offices’ average portfolio delivered returns of 15.5 percent last year. This accelerating performance was driven by their continued preference for equities in the context of a strong bull market. 28 percent of the total average family office portfolio is now comprised of equities. Improved performance can also be attributed to strength within the private equity space, which comprises over a fifth (22 percent) of the average portfolio and has delivered returns of 18 percent in 2017.
Reflecting this year’s upward performance levels, almost half (48 percent) of family offices reported that their assets under management increased over the year.
Anurag Mahesh, Head Global Family Office Group APAC, UBS Global Wealth Management said,
"For the first time since we have been analyzing this data, Asia has led the way on performance, benefiting from a relatively high exposure to developing market equities and the high number of private equity deals in the region. This is reflective of what we are seeing in our APAC family offices as well since they are increasingly interested in private equity deals. Some of the sectors that they are interested include technology, healthcare and education sectors.
At UBS, we are able to provide our GFO clients with exclusive investment, risk management and capital raising opportunities as they tend to hold long-term, strategic views when managing their assets and associated businesses.
"With Asia undergoing one of the largest inter-generational wealth transfers over the next decade, it is encouraging that almost 7 in 10 out of the Asia-Pacific offices surveyed indicated that they have a succession plan in place or are developing succession plans at the moment. As most of the Asian wealth are first generation, there is a higher expectation in this region that the next generation will take control over the family office. They participate by joining the board, assuming management or executive roles, undertake different projects for the family offices or are involved in philanthropic activities."
Dr. Rebecca Gooch, Director of Research, Campden Wealth said,
“In addition to the robust average family office portfolio performance of 15.5%, we have witnessed a significant growth and professionalization of the family office space since the turn of the millennium. One-third of all responding family offices now have secondary branches, half have reported that their AUM has increased year-on-year, and three-quarters reported that the wealth of the families they serve has risen over the last 12 months.”
2. APAC family offices' asset allocations favour equities and private equity
There are regional differences in investment portfolios. Family Offices in the APAC region on average allocate 28% of their portfolio to equities (14% to developed market equities and 14% to developing market equities.)
Real Estate is the second largest asset class in the average APAC family office (18%) and private equities direct investments (15%).
This is in contrast to the other regions. Those in North America invest more in developed market
equities and private equity funds than those in any other region, as they constitute 27% and 9.9% of their average portfolio, respectively. Family offices in Europe opt most often for alternatives (50%) and real estate in particular (23%). In the Emerging Markets, outside of alternatives as a whole (37%), equities (25%) and bonds (24%) prove to be most popular.
Cross-regional analysis shows notable variations between portfolio management strategies pursued by family offices across the globe. While those based in North America and Asia-Pacific tend to be committed to growth, nearly eight out of 10 (79%) of European family offices report to opt for a preserved or a balanced approach.
Figure 1: Investment strategies by region (%)
2018 | 2018 | Preservation | Preservation | Balanced | Balanced | Growth | Growth |
|---|---|---|---|---|---|---|---|
2018 | Europe | Preservation | 38 | Balanced | 41 | Growth | 21 |
2018 | North America | Preservation | 19 | Balanced | 42 | Growth | 39 |
2018 | Asia-Pacific | Preservation | 7.7 | Balanced | 52 | Growth | 40 |
2018 | Emerging Markets | Preservation | 10 | Balanced | 53 | Growth | 37 |
3. More than half of Asia Pacific family offices have a succession plan in place or are developing succession plans
The 2016 report found that 69 percent of family offices globally expected to undergo a generational wealth transfer within 15 years. In Asia Pacific, succession of control from one generation to the next was even more predominant with as many as 75 percent of the family offices surveyed expecting to undergo a generational transfer within the same time frame.
The findings in this year's report indicate that families have recognized the issue and started to take action. In APAC, close to 7 in 10 (71%) of the family offices either have a succession plan in place (39 %) or they are in the process of developing a succession plan (32%).
APAC ranks the highest globally in terms of expectations of when the next generation will take hands-on control over the family office at 46%. This compares to 41% in Europe, 30% in North America, 45% in Emerging Markets.
Globally, for those having already a plan in place, 24 percent indicated to have written plans in place, while 10 percent agreed verbally on their succession strategy according to the report.
Family offices around the world are taking a number of actions to prepare the next generation. These include work experience at external firms - 45% (e.g. investment banks), or in family offices (44%), or participation in educational projects (44%). Involving Next Gens in philanthropic or impact investing projects is also common amongst a third of respondents (32%).
4. Family offices increasingly manage their wealth with purpose
The next generation is set to lead the way in impact investing. Almost one third (32%) of the family offices surveyed are now involved in impact investing. This is an increase of 4.2 percentage points over the year. Looking to the future, 39% of respondents also reported that once the next generation takes control of their families’ wealth, they will likely increase their allocation to impact/ESG investing. In Asia Pacific, 35% of the family offices surveyed are involved in impact investing.
Patricia Quek, Country Team Head, Singapore Ultra High Net Worth and Global Family Office Southeast Asia, UBS Wealth Management
"Here in Asia Pacific, we have witnessed a growing interest by our millennial and female clients on sustainable and impact investments. Increasingly, a number of family offices represented by the next generation clients have started to embark on impact investing. Often, they would align their investments with their family values and performance criteria. At present, private equity and equity are the most common vehicles to impact invest in. "
Media contacts
UBS | Julie Yeo, T: +65 6495 5332 / +65 9673 4433; julie.yeo@ubs.com Adeline Lee, T: +65 6495 8632/ +65 9753 2480; adeline.lee@ubs.com |
Notes to Editors
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.
Headquartered in Zurich, Switzerland, UBS has offices in 52 countries, including all major financial centers, and employs approximately 60,000 people. UBS Group AG is the holding company of the UBS Group. Under Swiss company law, UBS Group AG is organized as an Aktiengesellschaft, a corporation that has issued shares of common stock to investors.
For more information, please visit: www.ubs.com
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
Enquiries: research@campdenwealth.com
