Global single-family and multifamily offices had their best returns in five years in 2017, buttressed by investments in equity, private equity and fixed income, according to a new report.
The annual Global Family Office Report by UBS found that the average family office portfolio returned 15.5 percent last year, up from 7 percent in 2016 and 0.3 percent in 2015. The improved results were largely due to equity investments, which constituted about 28 percent of the average family office portfolio, the report said.
The study looked at 311 single-family and multifamily offices across the globe with average AUMs of $808 million.
"Family offices have delivered their strongest returns since we began measuring their performance five years ago," said Sara Ferrari, head of the global family office group at UBS AG. "This reflects the bull market, as well as family offices' ability to take a long-term approach and embrace illiquidity."
Ferrari noted that family offices in Asia were the leaders in performance, taking advantage of exposure to equities in developing markets.
"Following a path we've seen in other regions, we're also seeing family offices in developing markets becoming increasingly sophisticated and institutionalized," she said. "We expect this trend to accelerate in the coming years."
Private equity investments also contributed to the growth, the report said, with that asset class comprising about 22 percent of the average family office portfolio and bringing returns of 18 percent in 2017. Fixed-income assets accounted for 16.2 percent of portfolio assets; real estate direct investments 17 percent; and hedge funds 5.7 percent.
About 48 percent of family offices reported that their assets under management increased in 2017.
The report also found that a sizeable portion of family offices are "investing with a purpose" through impact investing and investing with environmental, social and corporate governance (ESG) considerations.
About 38 percent of family offices are involved in sustainable, ESG investing, the report found, while about 32 percent are involved in impact investing, up 4.2 percentage points from the previous year. The report defined impact investing as "generating a measurable social and environmental impact alongside a financial return."
"Nearly half (45 percent) of respondents also reported that they plan to increase their sustainable investments over the next 12 months; 23 percent said they would not; and 33 percent said they were undecided," the report stated.