The ultra-rich families backing Taurus instead want to put their money directly into technology companies, according to Preiss. Taurus has about 10 percent of client assets allocated to alternative assets.
Drastic Shift
At $500 million multi-family office Golden Equator Capital Pte, the shift has been even more drastic. Over the past two years, the share of assets allocated to hedge funds has more than halved to less than 10 percent, while private-equity investments have doubled to 20 percent, according to founder and Chief Executive Officer Shirley Chua.
Chua said her clients are particularly interested in closely-held U.S. firms focusing on disruptive technologies such as car-hailing firm Uber Technologies Inc. or Magic Leap Inc., a U.S. startup working on a device that simulates reality.
“There is great interest in the unicorns,” said Chua, who before setting up Golden Equator assisted high-net-worth individuals from Asia and Europe as a director at Citigroup Inc. in Singapore. “Our clients want to participate in the new economy.”
Startups Struggle
Taurus and Golden Equator are part of a wider shift that’s undermining hedge funds.
The average share of alternative assets, mostly real estate and private equity, in Asian family office portfolios increased by 3 percentage points to 44 percent in the two years through May 2016, according to UBS data. The proportion allocated to hedge funds fell 1 percentage point to 5 percent.
New hedge funds in Asia are particularly affected by the reluctance of family offices to invest, according to Singapore Management University’s Teo.
“Especially for hedge fund startups, the bar has been raised because of this,” he said. “A lot of them depend not on institutional investor capital, but on capital from high net worth individuals and family offices so that they can get up to critical mass. It becomes a problem if family offices start to shy away from this.”