RESEAR CH


Average family office portfolio Cash or equivalent 7.0%


Other commodities 0.7%


Agriculture 1.8% Gold 0.9%


REITs 1.1% Hedge funds 5.7%


Private equity funds 7.6%


Developed market 22%


Private equity, direct investment 14% Real estate direct investment 17% Developing market 6% ■ Bonds ■ Equities ■ Alternative investments ■ Commodities ■ Cash or equivalent


Source: The UBS / Campden Wealth Global Family Office Report 2018 Note: Figures may not add up to 100% due to rounding


Family offices have increased their appetite for alternative investments, with 46% of the family office portfolio now allocated to private equity, hedge funds and real estate—a 2.9 percentage point increase from the previous year, according to the GFOR. Real estate direct investment allocations


The types of private equity investments family offices are involved in


Funds Direct


Fund of funds


84% 61% 26%


Source: The UBS / Campden Wealth Global Family Office Report 2018


rebounded to 17% after a moderate decline in 2016. Private equity remained a stronghold, with allocations now standing at 22% of family office portfolios. Direct investment in private equity accounted for 16%, while private equity funds accounted for 7.6%. Nearly 80% of these investments


Proportion of family offices that are invested in the following types of private equity funds and direct investments


100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%


72% 57% 57% 54% 46% 46% 3.4%


either met or exceeded their performance expectations and half of the family offices surveyed plan to invest more in direct private equity deals. But Fred Fruitman, managing director


of Loeb Holding Corporation—the Loeb family office’s investment arm based in the US—warns that while direct private equity investments are the hot topic among family offices, instead of increasing their allocations, they should be restricting their allocation to 5—10% of their portfolio. “I think we are in a bit of a bubble and


people think this bubble will continue, and they have not lived through bubbles bursting before,” Fruitman says. “This is an attractive asset category, but


Source: The UBS / Campden Wealth Global Family Office Report 2018 Note: Respondents were able to select multiple options


Figures are based on the sample of respondents who are involved with co-investing


a risky one. You should never be in it in a big way because when the bubble bursts you are going to be left with a lot of illiquid investments and you cannot sell them because that’s the whole point of private equity. You own it until something happens, but that something may never happen.”


Developed market fixed income 13%


Developing market fixed income 3.2%


Favouring alternatives


“As well as an increasing preference for


equities, the past three years have seen a concerted drive by family offices towards high risk, more illiquid investments in the pursuit of yield.”


10


CAMPDENFB.COM


ISSUE 75 SUPPLEMENT | 2019


Growth


Venture


Real Asset


Buyout


Private Debt


Special Situation


Other


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