A report released yesterday by UBS and Campden Wealth has revealed that the average family office portfolio returned 15.5% in 2017, up from 7% in the previous year.
This increased performance was driven by family offices’ preference for equities amid the current strong bull market, with 28% of the total average office portfolio comprising of equities and 22% involved in the private equity space.
The Global Family Office Report 2018 also revealed that 38% of family offices were now engaged in sustainable investing.
This type of impact investing increased from 25% in 2016 to 33% in 2017, and half of family offices said they planned to increase their sustainable investments over the next 12 months and beyond - especially as the next generation starts to take control of their families’ wealth.
In addition to this, the report found that nearly half (46%) of the average family office portfolio was now allocated to alternative investments.
UBS head of global family office Sara Ferrari: “Family offices have delivered their strongest returns since we began measuring their performance five years ago. This reflects the bull market, as well as family offices’ ability to take a long-term approach and embrace illiquidity.
“For the first time since we have been analysing this data, Asia has led the way on performance, benefiting from a relatively high exposure to developing market equities and the high number of private equity deals in the region.
"Following a path we’ve seen in other regions, we’re also seeing family offices in developing markets becoming increasingly sophisticated and institutionalised. We expect this trend to accelerate in the coming years.”
The news comes after FCA Chief Andrew Bailey voiced concerns about the way people were saving for their pensions in a recent speech.
Speaking at Gleneagles, Bailey said a large proportion of people were not saving enough for retirement, and a worrying number were fully withdrawing their pension pots to move savings elsewhere.
The FCA chief also said the organisation was concerned to see that some pension providers were ‘defaulting’ consumers into cash or cash-like assets.
And with 30% of non-advised drawdown consumers wholly holding cash, the FCA said that someone who wanted to drawdown their pot over 20 years could increase their annual income by over 30% by investing in a mix of assets rather than just cash.
Bailey said the FCA’s evidence suggests that if firms offer “a more structured set of options – making the decision simpler to navigate – it can improve the investment outcomes for consumers, better aligning with their objectives in retirement.”
Read the UBS & Campden Wealth report here.
