"Overtime, family offices have gone more illiquid and more risky in terms of asset classes and this allocation decision has actually paid off because those asset classes have performed well in 2016," Sara Ferrari, head of the Global Family Office Group at UBS, said. "They say they will continue to be invested in equities and a lot say they are looking at switching to developing markets equities from developed markets in search for yield, which is not very easy to find," she said. Forty-four percent of the family offices surveyed said they were planning to increase investment in developing markets equities, while 21 percent said they would allocate more to developed market equities.
The MSCI's All-Country World Index, a widely-tracked index of global stocks, has hit all-time highs this year thanks to low interest rates, receding European political risks, strong earnings and better growth prospects.
The average family office portfolio currently has 27 of its assets invested in global equities with 7 percent allocated to emerging markets. Family investors also focus on private equity, taking stakes in small- and medium-sized companies. Private equity funds account for 20 percent of the average family office portfolio. "This share looks set to grow further as ... 40 percent (of family offices) intend to allocate more into private equity funds," the report said.
Copyright Reuters, 2017