GLOBAL FAMILY OFFICE REPORT: FAMILY OFFICES REPORT STRONG
Reported overall investment portfolio returns fuelled by allocations to developed-market
equities, real estate direct investments
18 SEPTEMBER 2014 – UBS, in partnership with Campden Wealth Research, has
today launched a report on family offices in Europe, North America, Asia-Pacific, and
developing economies1. The research surveyed principals and executives in 205 family
offices with an average size of USD $890 million assets under management. In total, the
family offices represented manage over USD $180 billion in private wealth.
“Spanning six continents and over 40 countries, this year’s report provides very specific
insight on a wide range of family office topics, from performance and asset allocations
to structures and origins of wealth. Against initial expectations, the survey highlights a
high degree of common ground across family offices globally and will provide a sound
basis for benchmarking and sharing best practice. This study is the definitive work on
family offices to date and one from which family office principals, executives and
service providers can glean actionable insight,” said Philip Higson, Vice Chairman, UBS
Global Family Office Group.
Performance driven by the quest for growth
Globally, family offices reported strong performance in 2013. The average family office
investment portfolio returned an estimated 9% on the year, with slight deviation across
regions, investment strategy and family office size (denoted by assets under
management).2 North American and European family offices were most likely to report
outperformance against benchmarks, followed by offices domiciled in Asia-Pacific and
developing economies.3 Across all regions, offices pursuing growth-based investment
strategies were most likely to report outperforming against investment benchmarks.
1 For the purposes of the study, developing economies denotes Africa, Latin America and the Middle East.
Asia-Pacific was treated as an independent, developed wealth management market; this is the first global
family office to do so.
2 This estimate (1) is based on weighted averages of 2013 actual performance for asset class indices in
USD and (2) assumes a constant allocation for the full year. For individual asset class allocations and
performance indices, please contact email@example.com.
3 Almost half of North American family offices reported outperforming against benchmarks in 2013, the
same proportion of offices elsewhere meeting benchmarks.
The Great Rotation from Fixed Income into Equities
Critical to this performance were substantial holdings of developed-market equities.
While the typical family office portfolio was diversified across traditional asset classes,
developed-market equities and real estate direct investment comprised almost a third of
portfolios. The report found evidence of “the Great Rotation” – moving portfolio
allocations out of fixed income and into equities – signature evidence of the overall shift
toward balanced and growth strategies in family offices globally. Offices still pursuing
wealth preservation strategies – most of which were domiciled in Europe – on average
allocated 15% of portfolios to developed-market fixed income. This allocation is over
twice as much as holdings reported by growth-oriented offices.
Co-investing takes hold
Another key finding of the report is the prominence of co-investing among family
offices globally. Overall, four-fifths of family offices reported participating in office-tooffice
or investment bank-syndicated private equity deals in the last year. Deal size was
remarkable: in 2013, participating family office syndicated deal size averaged USD $76
million, while those offices collaborating on private equity deals averaged investing
USD $119 million. Regionally, offices located in Asia-Pacific were most likely to coinvest,
followed shortly by developing economy family offices. European and North
American family offices were less likely to conduct direct investments, though
longitudinal data suggests an uptrend in both regions.
Environmental, social and corporate governance considerations curb underperformance
While environmental, social and corporate governance (ESG) considerations were not
prevalent among family offices, these considerations were most likely to influence
strategic and tactical asset allocations. Regionally, developing economy and Asia-
Pacific family offices placed the most emphasis on ESG when choosing investments.
Strikingly, those offices giving credence to ESG were least likely to underperform
against their benchmarks.
Additional key findings
Structures: Costs, Services and Beneficiaries
Family office costs are driven by investment strategy, management approach
· The average family office spends 86 basis points on operating costs, of which
investment activities account for almost half.
· The most demonstrable factor for operating costs was investment strategy:
family offices pursuing growth strategies spent, on average, 94 basis points,
compared to 75 basis points spent by offices pursuing wealth preservation
strategies. Growth-oriented offices also outsourced less responsibilities to
external service providers.
· Investment-related services costs account for 40 basis points of total family
office costs globally, significantly higher than other services (general
advisory services cost 19 basis points, administrative activities garner 15
basis points and family professional services merit 12 basis points, on
average). Over half of investment-related expenditures – 21 basis points, on
average – go toward external specialist firms.
· Globally, the majority of services were provided in-house, but European,
Asia-Pacific and North American offices seem to be trending toward
outsourcing specialised services, such as tax planning.
External service providers are key partners in nascent wealth markets
· Family offices in developing economies and Asia-Pacific attributed the most
value to their relationships with private and investment banks, reflecting the
emergent state of the family office environment in developing wealth markets,
namely the scarcity of suitable, quality service providers tailored to family office
· Larger family offices reported higher overall levels of independence, having
assumed more in-house responsibility for the management and execution of
investments. Family offices managing over USD $1 billion allocated 35 basis
points toward outsourcing, compared to an average of 58 basis points for smaller
offices. Family offices that outsourced investment management were the least
likely to outperform against investment benchmarks.
Beneficiary involvement hinders family office performance
· Fifty-five per cent of family offices reported employing a beneficial family
member as a full-time member of staff, with almost a quarter of offices hosting
beneficiaries as part-time employees.
· Beneficiary involvement was highest in developing economies and Asia-Pacific,
with beneficiaries on average involved weekly in office operations; North
American beneficiaries were less involved, reporting quarterly oversight of
· Family offices reporting high levels of beneficiary involvement reported
pursuing more aggressive, growth investment strategies, higher costs and lower
performance against benchmarks.
Purpose: Origins, Accountability and Philanthropy
Family offices are designed ensure intergenerational wealth transfer
· Intergenerational wealth management is by far the most important objective of
family offices, followed by the consolidation of accounting and tax functions
and, thirdly, family unity. These priorities hold regardless of the degree of
divestment of family wealth, demonstrating a clear raison d’être for family
offices globally, regardless of family complexity.
Family office structures do not always meet family expectations
· Whereas family members rated investment-related services most important,
across family offices globally the relative value of these services was smaller
than the actual costs offices spent on these services. Managing investments cost
more than families expect, while family professional services are cheaper than
family members realise.
· Although family-related risk (reputation, data and confidentiality) is ranked the
most important risk management category by families, this risk category
received little attention when it came to the actual implementation of formal risk
management policies and external oversight of independent controls.
· Investment risk and banking risk, which trailed family-related risk in reported
importance, fared better, being almost twice as likely to receive formal,
structured attention, in aggregate.
Family office management of family philanthropy is growing and professionalising
· Most offices are involved in philanthropy, including strategic and organisational
features of their philanthropic engagements.
· One-third of family offices have endowments of at least USD 10 million, many
focused on healthcare and education sectors.
· Giving in Asia-Pacific increased by 10% since last year, with 77% of family
offices in the region reporting some form of philanthropic engagement, placing
the region on par with developing economy giving and slightly behind North
· While Europe hosts offices with the largest philanthropic endowments, almost a
third of offices in the region do not manage the family’s philanthropy, more than
the rest of the regions combined.
To read the full report, please visit www.globalfamilyofficereport.com.
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For further information please contact:
Director of Research, Campden Wealth
30 Cannon Street, London, EC4M 6XH, UK
+44 (0) 20 3763 2806
Vice Chairman, UBS Global Family Office
Notes to Editors:
About the research
The Global Family Office Report 2014 is the result of proprietary research undertaken
with family office principals, executives and beneficiaries in Europe, North America,
Asia-Pacific, the Middle East, Latin America and Africa in the spring of 2014.
Participants completed an extensive questionnaire and offered insight during in-depth
interviews, typically lasting an hour, conducted by members of the Campden Wealth
Research team. Participants were family office principals and executives managing the
assets of families with private wealth exceeding USD $100 million. Offices managing
assets of significant value on behalf of more than one family are included in the study
and comprise 20% of the sample. The study excluded multi-family offices that operate
as financial intermediaries for retail clients, which are categorically different from
traditional family offices.
The Global Family Office Report 2014 provides an analysis and evaluation of the
current and prospective outlook of family offices around the world. By focusing on the
relationship between office structures and investment strategy, as well as the ways in
which family involvement and family objectives for the office affect these structures and
strategies, this report provides a comprehensive analysis of the current, global family
office environment. In addition to presenting cross-sectional analysis, where appropriate,
the report makes use of longitudinal data compiled from Campden Wealth’s extensive
archives of Asian, European and North American family office studies.
UBS draws on its 150-year heritage to serve private, institutional and corporate clients
worldwide, as well as retail clients in Switzerland. Its business strategy is centered on its
pre-eminent global wealth management businesses and its leading universal bank in
Switzerland, complemented by its Global Asset Management business and its
Investment Bank, with a focus on capital efficiency and businesses that offer a superior
structural growth and profitability outlook. Headquartered in Zurich and Basel,
Switzerland, UBS has offices in more than 50 countries, including all major financial
centers, and approximately 60,000 employees. UBS AG is the parent company of the
UBS Group (Group). Under Swiss company law, UBS AG is organized as an
Aktiengesellschaft, a corporation that has issued shares of common stock to investors.
The operational structure of the Group comprises the Corporate Center and five business
divisions: Wealth Management, Wealth Management Americas, Retail & Corporate,
Global Asset Management and the Investment Bank.
About Campden Wealth Research
Campden Wealth is the leading independent provider of education, information and
networking for generational family business owners and family offices globally in
person, in print, via research and online. Campden Research supplies market insight on
key sector issues for its client community and their advisers and suppliers. Through indepth
studies and comprehensive methodologies, Campden Research provides unique
and proprietary data and analysis based on primary sources. For more information,
please visit campdenresearch.com or email firstname.lastname@example.org