(Image source from: Washington Post)
The United States-China trade spat, Brexit, populism or political ideology, and climate change are putting world’s richest families in worry consequently making them keep more money in cash, according to a survey of family offices by the world’s largest wealth manager.
About 42 percent of family offices that are set up to deal with the wealth of more or more rich families have increased their cash piles this year, a survey by 360 family offices by Swiss bank UBS (UBSG.S) and Campden Wealth Research revealed.
In 2019, total cash reserves were 7.6 percent of family office investments, an increase of 70 basis points from a year earlier.
About 55 percent of family office executives expect the recession to set about by next year while 63 percent believe Brexit is negative for Britain as an investment destination in the long term and 84 percent think populism will not grow feeble by next year.
Sara Ferrari, the head of UBS’ Global Family Office Group, told Reuters that family offices are taking a dim view of geopolitical events.
According to the survey, 53 percent of family offices see climate change as a possible greatest threat to the world, with present-day generations running the family money putting sustainable investing high on the agenda.
The views of family offices’ did not necessarily differ from those of institutional investors - pension funds, insurers, and sovereign wealth funds - or of the asset managers who help invest their money, Ferrari said.
But family offices had more flexibility in their investments, were less tied to specific benchmark indices and tended to invest more in illiquid long-term assets, she added.
Private equity was the second largest investment class in 2019 behind developed market equities. Family offices said they plan to concentrate more on private equity, the second largest investment class in 2019, next year including buying stakes in unlisted companies or the funds which invest in those companies - with a particular interest in technology firms.
This year, direct private equity investment achieved the best returns for the families at 16 percent. Altogether, the family offices had a return of 5.4 percent, based on different methodology from earlier surveys.
The surveyed companies manage a total of $330 billion in assets.
By Sowmya Sangam