The latest 2024 UBS Global Family Office Report has just landed on my desk. The main difference between our Private Investment Office and a Family Office is just numbers. The UBS survey represents families that have an average net worth of US$ 2.6 billion each who are likely to employ their own staff to manage their wealth. Both provide a solution for wealthy families needing tailor made structures to manage their investments.

The report reveals that over the last year family offices carried out some of their biggest shifts in strategic asset allocation with a move towards fixed interest on the back of rising yields. Short duration bonds were favoured over longer duration, being more sensitive to interest rates.  Additionally, major concerns in the form of geographical conflict and rising debt levels have resulted in them holding a greater allocation to the US. As US companies also lead the generative AI revolution, global asset allocations appear set to remain tilted to North America, although around a third are looking to increase exposure to Asia-Pacific, excluding China.  

I was pleased to see that Family Offices are relying more on actively managed portfolios and manager selection to diversify their portfolios. This moves them away from the herd where there is increased reliance on benchmarking and passive strategies. In their search for enhanced returns and having such a large amount of wealth, it is not surprising that the average weighting in private equity is around 22% and principally via funds.  

They hold around 10% of their wealth in cash, the same in Real Estate via fully owned physical property and 5% in Hedge Funds. The majority though is held in traditional assets such as equities, both listed and unlisted and fixed income.

Finally, with climate and nature increasingly in the spotlight, family offices take sustainability and its impact very seriously when considering investments and their own companies.

I have always kept an eye on the Family Office model and in particular to their asset allocation through my past connections. The portfolios we create for clients are truly bespoke and can cater for the specific requirements of our clients. Our mission is to invest in quality companies that can compound returns for our clients over the longer term, whilst reducing the risk of material capital loss. Volatility is inevitable but can be managed via flexible investment structures and seeking investments with negative correlation, although simply holding a meaningful amount in cash or cash equivalents not only achieves lower volatility but provides the means to invest when the opportunity arises.  Our asset allocation is not fixed so we can move between asset classes to suit as we did last year when we increased exposure to fixed interest, just as the Family Offices did. Like them we have access to private equity, infrastructure, alternative energy, commodities and property investments and will utilise all of these alongside traditional assets such equities and bonds.

EXE Capital combines the benefits of a private client stockbroker with independent structural planning.

Information taken from the 2024 Global Family Office Report produced by UBS.

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