Welcome to the fourth edition of the Global Family Office Report 2017. The report was established together with Campden Wealth. It is a comprehensive study supported by one of the largest and widest geographical reaches of its kind.
As a result, the report has become the go-to source of information for beneficial owners, family office professionals and service providers seeking insights and guidance. This year principals and executives in 262 family offices with an average size of 921 million US dollars in assets under management were surveyed.
After delivering a poor performance in 2015, family office portfolios have bounced back to an average return of seven percent in 2016. This improvement was mainly driven by equities, which now account for over 27 percent of the average portfolio, the highest proportion of any asset class. Private equity also continues to represent a considerable proportion of family office investments, while hedge funds and real estate have shown a halt this year. In the hunt for yield, family offices have been turning to more illiquid and higher risk investments.
After a year of improved investment performance, allocations to equities rose even further to account for over a quarter (27.1%) of the average family office portfolio. As reported for the fourth year in a row, private equity (including venture capital / private equity, co-investing and private equity funds) continues to maintain a strong position in the family office portfolio, accounting for a 20.3% share.
Looking to the future, family offices claim that they are the most likely to increase their allocations to equities (developed and developing markets), private equity, real estate and ETFs.
A key finding of last year's report was that 69 percent of family offices expected to undergo a generational transition within the next 15 years. Some progress has been made in 2016, but the report found out that only a third of family offices have written succession plans. Succession needs careful strategic planning and should remain a key priority for family offices in order to ensure continued wealth preservation and growth across generations.
Over 40 percent of family offices are expecting to increase their allocations towards impact and environmental, social and corporate governance (ESG) investments. This reinforces a finding in last year’s report that families with children born after 1980 will see an increase in requests to participate in impact investing. Of the family offices that are already active in this area, 62.5 percent engage via private investment and 56.3 percent through private equity. The most popular sectors to invest in are education, environmental conservation and energy / resource efficiency.