The survey examines what family offices around the world think of alternative investments and the risks involved. It continues a run of reports delving into areas such as private markets.
A new global study by Ocorian, a specialist
global provider of services to high net worth individuals and
family offices, financial institutions, asset managers and
corporates, reveals that 75 per cent of family offices expect to
take on more investment risk in the next 12
months. Increased transparency around alternatives, is
the key driver.
Private equity will see the biggest increase in allocations but
all alternative asset classes will benefit, the survey reveals.
The global study – among family members and senior
executives working for family offices with total wealth of
$119.37 billion – found that 75 per cent said their
investment risk appetite would increase, including 13 per
cent predicting dramatic increases.
The study – which covered 16 countries or territories
including the US, the UAE, Singapore, Switzerland, the UK, Hong
Kong, South Africa, Saudi Arabia, Mauritius and Bahrain – found
that [the need for] greater transparency for riskier asset
classes is the main reason.
Private market investing – a large part of the
“alternatives” area – is maturing, according to a
recent report from MSCI, the index provider. But the
area has also had stresses: “Semi-liquid” structures, such as
those offering periodic redemptions based on manager-reported
valuations, and increased scrutiny on how accurate and timely
those valuations are. (Such structures are also called
“evergreen.”) There are more signs of borrower strain,
particularly among smaller funds, the MSCI report said.
Last October, a survey by the asset management arm of Goldman
Sachs found that HNW and ultra-HNW individuals are more likely to
put alternative assets into their portfolios as they get richer,
suggesting that people with rising wealth are more comfortable
about holding illiquid assets.
Transparency matters
Around 61 per cent selected increased transparency as the key
driver for increased risk appetite with nearly half pointing to
falling interest rates and the outperformance of AI and tech
stocks as reasons for boosting risk appetite. Around 46 per
cent said that geopolitical instability means that risk attitudes
have to change.
ESG principles remain important in investment priorities – almost
all said they are a key consideration – while 79 per cent said
focusing on ESG principles will increase over the next three
years.
All the family offices questioned expect to increase allocations
to private equity over the next two years, with two-thirds
planning to boost allocations by between 25 per cent and 50 per
cent over the period. Around 96 per cent plan to increase
allocations to private capital with 93 per cent doing so for
private debt. That drops slightly to 88 per cent for
infrastructure and 86 per cent for real estate.
“Family offices are increasingly willing to take on more risk and
their growing interest in alternative assets is a major reason
for that – with plans to increase allocations to major
alternative asset classes in general,” Andy Bailey, head of
Private Client Guernsey & Isle of Man at Ocorian said. “It is,
however, striking that nearly half believe that rising
geopolitical instability is leaving family offices with little
choice but to increase their risk appetite, as our research
shows.”
See this report from June 18, by our US correspondent
about Morningstar”s views of the private credit market dramas of
recent months.