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This is among the main findings of the second


annual UBS/Campden Wealth Asia-Pacific Family Offices Survey. The report, ‘Coming of Age: Asia- Pacific’s Family Offices Find Their Footing’, details the size, features and concerns of Family Offices throughout Asia-Pacific. Real estate accounts for 16% of allocations this


year, compared with just under 9% in 2012, and allocations to venture capital and direct private equity grew to 15%, compared with 4% in 2012. Asian investors are taking money away from equity and bond markets to fuel this move into direct investing, with equity market allocations in developed countries falling to 14% of total assets, compared with 21% in 2012. Allocation towards fixed income has also fallen in the last year. Hedge fund investing by Asia’s wealthiest families has also been cut by nearly a half in the last year. Wealth creation in the region is still very much tied up with the family business and Family Offices have yet to capture the imagination of the region’s wealthiest families as they have done in Europe and North America. But the overriding importance of the family business in wealth creation is expected to moderate with generational shifts taking place in the region. As these businesses move from first- generation control to second, this will see more Family Offices being created and the greater ‘professionalisation’ of current ones Further, Asia’s wealthy families are becoming much more bullish towards investment prospects, with twice as many respondents more optimistic about investment prospects than a year ago. Philanthropy is becoming a big issue for Asia-


Pacific’s Family Offices with 67% of respondents saying they engage in philanthropic activities, and a further 25% of those that do not are planning to do |so in the next three years. “Asia’s wealthiest families are becoming more optimistic about investment returns, but that doesn’t mean they are piling into equities and hedge funds. On the contrary they are cutting their investment allocations to these asset classes and like their counterparts in Europe investing more in direct investment opportunities like other businesses and property,” said David Bain, Head of Research at Campden Wealth. Kathryn Shih, CEO of UBS Wealth Management


Asia Pacifi, says entrepreneurial families have continued to play a key role in contributing to Asia- Pacific’s growing share of global wealth. “Although the Family Office model is still in its


infancy in the region, we continue to see increasing client interest in topics such as family business continuity, family decision-making, wealth structuring, philanthropy and the setting up of Family Office structures,” says Ms Shih.


MARKET INSIGHTS Hong Kong and Singapore


Both cities are the leading centres for Family Office activity in the region. With the exception of Australia and Japan, pretty much all the Family Offices set up in the region by Asia’s wealthiest families are based in either one of these two centres. More than 75% of all Family Offices set up in the region in the last 10 years have been based in these two cities.


Australia and Japan


Although Family Offices have been established in Japan and Australia, the markets there tend to be more provincial and very much driven by local demands, compared with their counterparts in Singapore and Hong Kong, which are more international in their outlook.


China


Family offices set up by mainland Chinese families don’t necessarily base their office in Hong Kong, some also go to Singapore. Some are also looking to base more of their activity in Shanghai.


A breakdown of asset allocation decisions among the main markets shows the following trends:


Ö Real estate investing receives the biggest asset allocation among all the markets in the region, but is particularly strong in Hong Kong.


Ö Although Singapore-based Family Offices also like real estate investing, they were more exposed to venture capital and direct private equity stakes than any other centre in Asia.


Ö Australian Family Offices liked equities much more than their counterparts in the rest of Asia-Pacific.


Ö Cash holdings among Family Offices were still strong in all countries, but particularly so in Hong Kong.


 FAMILY OFFICE: THE FUTURE 67


INVESTMENT, WEALTH & SECURITY


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