Asia Pacific Poised Be Top Investment Destination Family Offices Globally Ubs Report
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As we move towards 2024, family offices are increasingly turning their attention to the Asia Pacific region, according to the UBS Global Family Office Report 2024. This report, which gathered insights from 320 single family offices with an average net worth of US$2.6 billion, found that the majority of family offices have kept their largest regional allocations in North America (50%) and Western Europe (27%). However, over the next five years, family offices are looking to increase their investments in both North America and Asia Pacific, with 38% and 35% respectively planning to add more allocations to these regions.
The UBS report also revealed that family offices are looking to balance their portfolios between bonds and equities. In particular, Asia Pacific family offices are set to add fixed income (48%), developed market equities (45%), private equity (24% in direct investments and 32% in funds) as well as hedge funds (31%) over the next five years. These investment strategies are expected to help family offices diversify their portfolios and achieve better returns.
Active management is also gaining popularity, with almost four in 10 (39%) family offices globally relying on manager selection and/or active management to enhance portfolio diversification. This is an increase of 4% from 2023, and is seen as a way to navigate the rapidly changing investment landscape. According to the report, generative artificial intelligence is the most popular investment theme, with 78% of family offices planning to invest in this area in the next two to three years.
In Southeast Asia, family offices have a positive outlook on the US real interest rates, with 88% believing that they will last longer. These family offices are also looking to diversify their portfolios through manager selection and active management, with 50% adopting this strategy. However, compared to their global counterparts, Southeast Asian family offices have the lowest allocations to real estate at an average of 6%. Their top concerns for the next 12 years include a major geopolitical conflict and higher inflation, while higher taxes and climate change top their concerns for the next five years.
Sustainability is also a growing focus for family offices, with 45% of those in Asia Pacific taking philanthropy and charitable giving into account. Healthcare is the top theme for 59% of family offices in the region, indicating a growing interest in socially responsible investing. Other top sustainability themes include clean tech, green-tech, and climate tech (40%), philanthropy (39%), impact investing (36%), education (36%), and carbon markets/carbon capture and removal (21%).
The survey, conducted between January 18 and March 22, highlights the increasing importance of sustainability for family offices, not just in their investment portfolios but also in the long-term outlook of their operating businesses. With the Asia Pacific region emerging as a top investment hotspot, family offices are likely to continue diversifying their portfolios and exploring new themes and strategies to achieve better returns.