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GlobeOp on the SS&C GlobeOp platform, divided by the AuA at the beginning of the month for SS&C GlobeOp fund administration clients on the SS&C GlobeOp platform. Forward redemptions as a percentage of SS&C GlobeOp's assets under administration on the SS&C GlobeOp platform have trended significantly lower since reaching a high of 19.27% in November 2008.

The gross return of the SS&C GlobeOp Hedge Fund Performance Index for August 2014 measured 1.10%. Hedge fund flows as measured by the SS&C GlobeOp Capital Movement Index advanced 0.58% in September. “Subscriptions were nearly double that of redemptions for September, although capital activity was generally lower overall,” said Bill Stone.

Miliband promises tax loophole crackdown Ed Miliband has said that a Labour government in the next parliament would target tax loopholes used by hedge funds. In his speech to the 2014 Labour Party conference, held in Manchester, he proposed the changes as part of a plan to raise £2.5 billion from the private sector to be used for NHS funding. In his speech, Miliband said that up to £1 billion of this amount would be raised by closing the loophole used by hedge funds. One of the specific changes in question involves a relief from paying tax on shares if an investment bank buys them on their behalf. This intermediary tax relief is used by a wide variety of investors, including hedge funds. It is unclear at this point whether the closure of the loophole can be limited to hedge funds only, or whether the Labour plan includes intermediary tax relief in general. City sources and representatives of the alternative investment industry were quick to condemn the plan from the Leader of the Opposition, saying that it would damage business beyond the hedge funds explicitly targeted in the speech.

Insights into billionaires' balance sheets UBS, in partnership with Campden Wealth Research, has launched a report on family offices in Europe, North America, Asia-Pacific, and developing economies. The research surveyed principals and executives in 205 family offices with an average size of $890 million assets under management. In total, the family offices represented manage over $180 billion in private wealth.

“Spanning six continents and over 40 countries, the report provides very specific insight on a wide range of critical family office topics. The report 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 of the UBS Global Family Office Group.

“While performance lagged slightly among developing economy family offices, 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. Despite these differences, the research revealed significant similarities globally in family office investment management structures, manager selection and oversight, as well as reporting requirements,” said Dominic Samuelson, chief executive officer of Campden Wealth.

KEY FINDINGS Investments • Performance: 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).

• Asset allocations: 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 growth strategies in family offices globally.

• Co-investing: four-fifths of family offices co-invested in 2013; office-to-office deal size averaged $119 million, while syndicated deal size averaged $76 million.

Structures • Costs: the average family office spent 86 basis points on operating costs, of which investment activities accounted for almost half.

• Relationships with service providers: over half of investment-related expenditures – 21 basis points, on average – were allocated to external specialist firms. Family offices managing over $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.

• Beneficiaries: 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 costs more than families expect, while family professional services are cheaper than family members realized.

• Philanthropy: one-third of family offices have endowments of at least $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 American rates. 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.

EM uncertainty, but opportunities remain Despite perceived political uncertainty and rising inflation, the valuation case for emerging markets is still compelling, according to BNY Mellon’s Emerging Markets Report. In the report, fund managers from Newton, Standish Mellon Asset Management Company LLC and Insight Investment look at the latest trends affecting emerging market assets and provide an outlook for the months ahead. The report includes views on the growth of long/short strategies in emerging market fixed income, insight into the impact of political risk on the sector and the influence of China.

Sophia Whitbread, emerging market equity income manager at Newton, commented on the factors supporting valuations: “Monetary conditions in the West look set to remain relatively loose for some time, as key developed markets continue their struggle with heavy debt burdens. Against this context, we continue to see emerging markets as relatively well positioned globally, and find the current valuation of emerging markets compelling, both relative to other areas and on an absolute basis. We also believe that demand for equities for their income will continue to be supported by ageing demographics in developed markets as older people seek income for their retirement in a low-interest rate environment. Against an uncertain backdrop, with significant divergence in trajectories of countries in both developed and emerging markets, differentiation between markets and individual stocks will become increasingly important.”

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