VIEW ONLINE Here's how the richest people in the world are investing their money
- A report by UBS and Campden Wealth on family offices has some important insights on where and how the world's ultrarich are investing their money.
- Family offices are typically private offices which manage the money of people with significant wealth.
- Family offices are allocating 28% of their average portfolio to the equities market, followed by 22% in private equity, real estate (17%) and bonds (16%).
- Allocations to hedge funds continues to fall to 5.7% amid concerns over weak performance and relatively high fees.
The world's super-rich are loving stocks — allocating 28% of their average portfolio to the asset class, followed by private equities and real estate.
The UBS and Campden Wealth annual report on family offices has some important insights on where and how the ultrarich are investing their money. Family offices are typically private offices which manage the money of people with significant wealth.
The report was based on surveys of 311 family offices globally, with an average of $1.1 billion under management. About 40% of the family offices surveyed were located in Europe, one-third in North America, and the rest in the Asia-Pacific region and other parts of the world.
Here is the breakdown on how and where they are investing their money. - Equities: Family offices are allocating 28% of their average portfolio to equity markets, up by 4.3 percentage points over a year. They invested 22% of their equity portfolio in developed markets and 6% in developing markets. The move paid off with developed markets and developing markets and last year returning 23% and 38% respectively.
- Private Equity: Private equity remains a stronghold in family-office portfolios — commanding a 22% share of the average portfolio, up 3.8 percentage points from 2017. Family-office portfolios posted an average return of 18% in the private-equity space, up from 13% a year ago.
- Real Estate: It held its position as the third-largest asset class, at 17% of the average-portfolio allocation. At 23% of their average portfolio, family offices in Europe invested the most in real estate, followed by Asia-Pacific (18%) and North America (13%).
- Hedge funds: Allocations to hedge funds fell for the third consecutive year, amid concerns of weak performance and relatively high fees. Hedge funds made up just 5.7% of the average family-office portfolio, a 3.2 percentage point drop from a year ago.
- Bonds: The average family office dedicated 16% of its portfolio to bonds. They invested 24% of their bond portfolio in the emerging markets of South America, Africa, and the Middle East.
The report noted how family offices operating across the different parts of the world favor different asset classes: - North America invested more in developed-market equities (27%) and private-equity funds (9.9%).
- Europe preferred alternatives (50%) and real estate (23%).
- Asia-Pacific favored equities (28%), real estate (18%), and private equity (15%).
- Emerging markets liked alternatives as a whole (37%), equities (25%), and bonds (24%).
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