Switch in focus for Asia's richest families

PHOTO: Switch in focus for Asia's richest families

Asia's wealthiest families are moving more funds out of bonds and stocks into direct investments such as property and venture capital, according to a study released last week.

The shift mirrors similar moves among the rich elsewhere and points to changing sentiment about investing.

"Asia's wealthiest families are becoming more optimistic about investment returns, but that doesn't mean they are piling into equities and hedge funds," said Mr David Bain, research head at Campden Wealth, an independent information provider for family offices and collaborator on the study with UBS.

"On the contrary, they are cutting their investment allocations to these asset classes and, like their counterparts in Europe, are investing more in direct investment opportunities like other businesses and property."

Real estate accounted for 16 per cent of allocations early this year compared with just under 9 per cent a year ago.

Funds into venture capital and direct private equity grew to 15 per cent compared with 4 per cent last year.

Equity market allocations in developed countries tumbled to 14 per cent compared with 21 per cent last year.

Amounts allocated to fixed income have also fallen in the past year, while funds put with hedge funds have been cut by nearly half.

The study involved extensive interviews with more than 25 family offices in Asia-Pacific, with the level of wealth managed by participants ranging from under US$100 million (S$124 million) to more than US$1 billion.

Participants ranged from long-established operations servicing at least four generations of the same family across multiple jurisdictions to newer establishments developing their services to second-generation family members, or non-related families.

The study also unveiled certain behavioural traits of these investors.

For instance, it found that family offices are long-term investors, with 74 per cent of them reporting an investment horizon of at least five years.

Philanthropy is becoming a prominent issue for these family offices, with 67 per cent of respondents saying they engage in philanthropic activities. And 25 per cent of those investors that do not contribute to charity say that they plan to do so in the next three years.

Most family offices in the Asia-Pacific are being set up in Singapore and Hong Kong, with more than 75 per cent of those established in the past 10 years in the region located in the two cities.

Ms Kathryn Shih, chief executive of UBS Wealth Management Asia-Pacific, said: "Although the family office model is still in its infancy in the region, we continue to see increasing client interest in topics such as family business continuity, family decision-making, wealth structuring, philanthropy and the setting up of family office structures."

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