Growing more than ten-fold in number since 2008, family offices are a growing international financial force. These latest financial strongholds are widely varied in their investment strategies and criteria—some choose to remain close to the industries that made their wealth, while other prefer to explore new ones. Despite the variety, there are some intrinsic trends which tie together the Western family offices.
Joseph Falanga, a partner in UHY's New York region, serves as a trust & estates specialist and has advised numerous family offices. He said family offices tended to favor equity with themes of growth and technology popular until recently. This occurred alongside the stagnation of value investing, although Falanga noted, “it remains to be seen whether this continues in the context of coronavirus.”
But where one investment vehicle falls out of favor, another rises in its place. “Many offshore families look for opportunities in private equity where fewer middlemen are involved,” Falanga said. One such opportunity has been real estate, “as it’s a tangible asset that people understand,” he added.
Another burgeoning trend is the collection of cash by family offices. “Family offices are also gathering cash to take advantage of opportunities,” Falanga said. One strong bias in US domestic family offices is for liquid equity assets, he noted, but went on to say, “Liquidity remains important for all clients, especially when it comes to the current volatility in markets. We encourage liquidity at all times.”
The Economist Intelligence Unit produced a report comparing the trends of family offices in the East and West hemispheres. Download the report here.
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