By their nature, Family Offices work over the long term. That means secure investments are a core part of their strategy, ensuring the legacy of wealth for their family clients’ later generations. This article will walk you through all the investment opportunities and investment trends for Family Offices in recent years.
Alternatives
In recent years, there has been a noticeable shift towards diversification beyond traditional assets, such as stocks and bonds. A 2023 BlackRock survey revealed that allocations to alternative investments, including private equity, venture capital, real estate and direct investments in businesses, now comprise 39% of Family Office portfolios, surpassing even allocations to public equities (37%). This diversification helps to mitigate risks and enhance long-term returns.
Impact investing and ESG
Family Offices are also ever more interested in impact investing, they are seen increasingly integrating environmental, social and governance (ESG) into their investment strategies. A 2023 Citi Private Bank survey found that 72% of Family Offices have allocated capital to sustainable investments, driven by growing sustainability concerns and a broadening range of themes and instruments available for such investments. This aligns investment decisions with values and societal impact goals and there are numerous examples of successful impact investments with positive outcomes.
Real Estate
Property remains a cornerstone of many Family Office portfolios, offering diversification, stable income and potential for capital appreciation. In an asset class where local knowledge is critical, Family Offices naturally prefer to invest domestically in real estate. According to the UBS Global Family Office 2023, Family Offices with real estate investments state that their allocations include 30% domestic residential and 32% domestic commercial. The report also reveals that Family Offices in Europe, Latin America and the US are more likely to plan to raise real estate asset allocations in the next five years than those in Asia-Pacific.
Technology and globalisation
Technology and innovation are also key investments. Opportunities flourish in sectors such as fintech, health tech, artificial intelligence and sustainable technology. Agreus understands there is growing interest among Family Offices in these sectors, driven by the potential for high growth and disruption.
They are also exploring opportunities in emerging markets, looking for higher returns and diversification benefits. The Citi Private Bank survey showed that 55% of Family Offices hold assets in multiple countries, reflecting a growing appetite for global diversification. However, thorough due diligence and risk assessment are crucial in these regions.
Risk management and governance
However, this increasing reach into non-traditional investment areas makes robust risk management frameworks and governance structures, including regulatory compliance and cyber security, vital. Our 2023 Global Family Office Compensation Benchmark Report found that only 60% of Family Offices have an Investment Committee and 58% have a formalised governance structure in place. These are a good start, but they should be much higher.
To achieve good governance and risk management, you must have the right people in place. Leveraging specialist recruitment such as Agreus, Family Offices can access top-tier investment talent that can support a Family Office’s long-term success. Agreus offers tailored recruitment solutions to meet your needs. Should you have any enquiries, please contact us today.
Staying informed about evolving investment trends and opportunities is essential for Family Offices. By embracing diversification, impact investing, technological innovation and global perspectives, Family Offices can position themselves for long-term success in an increasingly complex investment landscape.
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