Family offices also continued their steady march away from hedge funds, echoing other institutional investors’ concerns about high fees and poor performance. Hedge fund allocations have declined to an average of 7.1 percent in 2017 from 8 percent in 2016, despite improved performance.
Equities will remain a strong component of portfolios, according to the report, as most family offices plan to maintain their allocations. Family offices are looking to emerging markets for opportunities: 44 percent of those surveyed said they plan to allocate more money to developing market stocks while just 21 percent said they intended to boost developed market stock exposure.
UBS, the world’s largest wealth manager, is competing with banks including cross-town rival Credit Suisse Group AG to lure the very wealthy to manage part of their riches. In the first half of 2017, UBS managed 831 billion francs ($870 billion) of ultra-high-net worth money, an increase of 12 percent. However, private banks remain under relentless pressure as negative or low interest rates, the reluctance of wealthy clients to put their cash to work and competition from lower-fee passive strategies weigh on margins.
The UBS/Campden report is based on a survey of 262 families between February and May with an average wealth of $921 million. Sixty-eight percent of respondents manage money for a single family. Year-over-year data draw on responses from more than 100 family offices that completed the survey in 2016 and 2017.
This article was provided by Bloomberg News.