Campden Wealth Global Family Office Report 2014 Asia-Pacific findings

Global Family Office Report 2014: Largest Family Office Research Study ever

offers insight into Asia-Pacific Family Office Performance and Structures

Hong Kong/London, 23 October 2014 – UBS, in partnership with Campden Wealth Research,

has today launched a report on family offices in Asia-Pacific, Europe, North America, and

developing economies. The research surveyed principals and executives in 40 Asia-Pacific family

offices with an average size of USD 480 million assets under management. In total,

participating Asia-Pacific family offices represented manage over USD 20 billion in private

wealth.

Spanning key markets of Hong Kong and Singapore, including family offices domiciled in

China and Australia, the report provides very specific insight on family office investments,

structures and family purpose. The report highlights how Asia-Pacific offices have made

significant progress in creating sustainable wealth management structures, as well as

fostering important relationships across investment and business networks.

"In Asia, we are seeing more and more families professionalizing their family structures,

implementing a governance framework for the family, the enterprise and the management of

their assets, some of them by establishing a family office. This is one of the major trends as

the second and third generations further assume roles of leadership within the family

businesses in the region. We also see them exercising more diversification in their investment

portfolio, although Asian family offices are still investing a lot in Asia-Pacific as they are more

connected with peers and have a better knowledge of their home markets." said Kathryn

Shih, Head of APAC, UBS Wealth Management.

"This report is the definitive work on family offices to date and provides a sound basis for

family office principals, executives and service providers to benchmark performance and

share best practice. We will continue our commitment in working with families to help them

preserve and grow their wealth through the generations,” added Kathryn Shih.

"While Asia-Pacific performance lagged slightly behind offices domiciled in Europe and North

America, our research attributed this largely to holdings of developing-economy equities and

fixed income, which last year were surpassed by the meteoric rise of developed-economy

equities. Asia-Pacific offices also reported higher operating costs than global counterparts,

which were a result, largely, of a regional focus on costly, growth-oriented investment

strategies. The fact that outsourcing is not prevalent dispels the common conception of Asia-

Pacific family office dependence on external service providers," said Dominic Samuelson,

Chief Executive Officer of Campden Wealth.

The key findings

Investments

 Performance: The average Asia-Pacific family office investment portfolio returned an

estimated 8% in 2013, with slight deviation across investment strategy and family

office size (denoted by assets under management).1 A number of family offices

reported underperforming relative to their investment benchmark, a first occurrence

in three years of UBS/Campden Asia-Pacific family office studies.

Asset allocations: Asia-Pacific offices are focused on growth strategies;

outperformance against benchmarks was attributed to significant allocations to direct

investments (real estate and private equity) and smaller allocations to capital

markets.

 Co-investing: Compared to global counterparts, Asia-Pacific family offices are the

most active in all forms of co-investment, with almost all offices declaring some type

of collaboration with other family offices.

Structures

Costs: At 92 basis points, Asia-Pacific offices have the highest average operating

cost of participating offices; investment activities accounted for just over half of

operating expenses.

Relationships with service providers: Offices in this region display noticeably higher

degrees of in-house management of all aspects of an office's investment services.

Globally, over half of investment-related expenditures – 21 basis points, on average –

were allocated to external specialist firms. Family offices managing over USD 1 billion

allocated 35 basis points toward outsourcing, compared to an average of 58 basis

points for smaller offices.

Beneficiaries: Globally, family offices reporting high levels of beneficiary involvement

reported pursuing more aggressive, growth investment strategies, higher costs and

lower performance against benchmarks.

Purpose

Origins: 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.

Accountability: 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

significantly more than families expected, while family professional services were

cheaper than family members realised.

Philanthropy: Philanthropy is an increasingly important function for family offices in

Asia-Pacific: one-third of family offices have endowments of at least USD 15 million,

with many focused on education and healthcare. 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 American rates. Ten percent of Asia-Pacific offices reported

endowments greater than USD 50 million.

For more information about the report, and to request a press copy, visit

www.globalfamilyofficereport.com.

1 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 research@campdenwealth.com.

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. 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.

Media contacts:

Campden Wealth: Andrew Porter +44 (0) 20 3763 2806 andrewporter@campdenwealth.com

UBS: Fiona Chan +852 2971 8837 fiona-y.chan@ubs.com

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 in-depth 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 research@campdenwealth.com.

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