Family office investment returns stood at an average of 5.4% in the 12 months to Q1 and Q2 of 2018, a fall from 15.5% a year previously.
This is according to the Global Family Office Report 2019 produced by UBS and Campden Wealth Research.
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This dip in the fortunes of investments is accompanies by a fall in sentiment, with 55% of family office executives expecting a market downturn to commence by 2020.
“Family offices are cautious about geopolitical tensions, and there is a widespread sense that we’re reaching the end of the current market cycle,” says Dr Rebecca Gooch, Campden Wealth’s director of research says.
Large majorities of family offices believe that Brexit will be negative for the UK as destination for investment long-term (63%) and that populism will remain prevalent in geopolitics throughout 2020.
According to Dr Gooch, while family offices are not making “wholesale changes” to portfolios, mitigating risk is becoming a priority, with 45% re-aligning investment strategies and 42% building up cash reserves.
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By GlobalDataOne of the key findings of last year’s equivalent report was family office Next Gen offerings. Forty-three per cent of family offices had a succession plan in place, which UBS’ head of global family office group, Sara Ferrari, considered not nearly enough.
This figure has increased to 54% this year, which Ferrari views as encouraging.
“This is an issue we have been advising our clients to prioritize for some time, and it is not easy to get right,” she says.
“Succession often spans a series of complex matters involving business, investments and family relationships. Written plans are important, but they should be considered as part of a broader process of preparing the Next Gen to take control.”
The study’s findings do throw into question a Next Gen strategy centered around appealing to a younger generation however, as it finds that the average age at succession is 45 years old.
