Allocations to hedge funds continue


to fall, a three-year trend that began in 2015. The asset class made up just 5.7% of the average family office portfolio last year, a 3.2 percentage point drop year- on-year. Fruitman says hedge funds were


minded peers. “We have always done co-investing


because we found that the best deals come from other families and I think that other families are discovering this,” Roach says. “It is a very attractive concept—why do


I think we are in a bit


it by yourself? Get other people in there to examine it, share the risk, and share the work and contacts.” However,


of a bubble and people think this bubble will continue and they have not lived through bubbles bursting beforE


family offices are still facing challenges in this space. Nearly 70% pointed to deal due diligence as a key issue, while hardships that relate to sourcing attractive deals


attractive to families in the past because it gave the same returns as private equity but with added liquidity. However, the asset class has been underperforming and requires high fees. “I think it will contract for a little


while and then it will stabilise and continue to be an asset category. The fees may come down but it will still be a part of people’s portfolios.”


Appetite for co-investing


Families are now increasing their interest in co-investments, with 23% of all direct private investments allocated to deals. Within the direct investments category, 92% of co-investment deals met or exceeded their performance expectation. Josh Roach, chief investment officer at


Lloyd Capital Partners, a US-based single family office investment vehicle for direct private investments, says co-investing enables families to invest with like-


(64%) and obtaining sufficient deal flow (42%) followed as central concerns. Regionally, family offices in Asia-


Pacific also highlighted a lack of qualified independent advisers (13%) relative to other regions, which researchers say is, in part, a consequence of the relative newness of the family office space in Asia-Pacific compared to the more mature markets within Europe and the United States. Roach advises families to use their


networks to increase their opportunities but to be wise when choosing a partner. “One of the things you should spend


a huge percentage of your time doing is talking to other families because the key to success [in co-investing] is deal flow,” he says. “You also need to really understand


who you are co-investing with in terms of their history and keep in mind that just because a family has invested in something, it does not automatically make it a great investment—it’s just a starting point and you have to do your homework.”


46% ALLOCATED TO ALTERNATIVE INVESTMENTS


FAST FACTS


92% CO-INVESTMENT DEALS MET OR EXCEEDED EXPECTATIONS


5.7% ALLOCATED TO HEDGE FUNDS


22% ALLOCATED TO PRIVATE EQUITY


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


ISSUE 75 SUPPLEMENT | 2019


CAMPDENFB.COM


11


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32