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Family offices planning ‘biggest shift’ in asset allocation in years, survey

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Published: 5 June 2023

The shift includes a re-evaluation of their approach to sustainable investment including embracing more impactful strategies, according to the latest UBS Global Family Office report.

Family offices are re-evaluating their investment strategies in response to economic and geopolitical concerns | Matejmo on iStock

Concerns about inflation, interest rates and economic growth are resulting in family offices undertaking the largest reassessment of their strategic asset allocation for several years, according to the UBS Global Family Office Report 2023.

The survey, based on interviews with 230 single family offices around the world with an average net worth of $2.2bn, found that the end of close-to-zero interest rates means balanced portfolios with active management are back in favour.

Across asset classes, the biggest change family offices are planning concerns developed market fixed income. After 3 years of cutting back exposure to bonds, 38% of respondents said to be planning to increase allocations over the next five years.

According to the survey, family offices are refocusing their private equity allocations by increasing exposure to funds and reducing direct private equity investments. Respondents also show appetite for increasing investments in private debt and infrastructure.

In terms of investment themes, digital transformation remains a top priority for family, with 75% of respondents stating it’s a likely area of investment in the next two to three years. Other popular themes include medical devices and healthtech, automation and robotics, and green technology.

‘More impactful’ strategies

Family offices also appear to be re-evaluating how to invest sustainably, considering “more impactful strategies”.

While exposure to ESG integration investing shows little change, with today’s 22% allocation remaining roughly the same (21% in five years), impact investing is set to grow slightly, from 8% to 11%.

UBS notes that it’s “likely that families will have more detailed discussions on sustainability with the next generation and investment advisors” going forward, predicting a shift from “less intentional exclusion-based strategies into ESG integration and impact investing”.

The report notes that although family offices with sustainable investments allocate an average of 37% to exclusion-based investments today, they see that allocation dropping to 24% in five years.

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