Family
offices
have
increased
their
investments
to
developed
market
fixed
income
by
the
largest
amount
seen
in
five
years,
according
to
a
new
study
by
UBS.
This
was
among
one
of
the
major
shifts
seen
in
this
survey
of
320
global
single
family
offices
across
seven
regions
—
the
largest
family
office
study
UBS
has
carried
out
to
date.
They
represent
families
with
an
average
net
worth
of
$2.6
billion,
with
a
total
of
$600
billion
of
wealth.
In
terms
of
region,
the
average
global
asset
allocation
remains
geared
toward
North
America,
said
UBS.
That’s
due
to
U.S.
tech
companies
still
leading
the
generative
artificial
intelligence
revolution,
it
explained.
Here’s
how
family
offices
are
investing
this
year
and
how
they
plan
to
change
their
allocations
in
the
next
five
years,
according
to
UBS’
Global
Family
Office
Report
2024.
Developed
market
bonds
versus
stocks
Family
offices
shifted
their
allocations
to
developed
market
bonds
by
the
largest
amount
in
five
years
—
in
a
shift
that
may
reflect
elevated
bond
yields,
according
to
UBS.
That
has
also
reintroduced
“greater
balance”
between
bonds
and
stocks,
it
added.
Family
offices
aim
to
fund
their
increased
fixed
income
allocations
mainly
from
cash
—
more
than
half
(53%)
plan
to
do
so
over
the
next
five
years.
Around
a
fifth
plan
to
do
so
by
cutting
their
weighting
in
private
equity
(21%)
and
real
estate
(20%),
respectively,
to
fund
their
bond
allocations.
In
2022
and
2023,
allocation
to
developed
market
fixed
income
was
at
12%
and
16%,
respectively
–
from
11%
in
2019.
Family
offices
plan
to
maintain
the
same
allocation
for
2024
–
at
16%.
“Family
offices
are
chiefly
concentrating
on
bonds
with
tenors
of
up
to
five
years,
which
have
the
attractions
of
high
yield,
stability
and
sensitivity
to
falling
policy
rates,”
said
UBS.
Developed
market
stocks
accounted
for
almost
a
quarter
(24%)
of
their
portfolios
in
2023
on
average,
and
family
offices
plan
to
increase
this
to
26%
in
2024,
according
to
the
study.
Overall,
almost
half
of
family
offices
anticipate
raising
their
developed
market
stock
allocation
in
the
next
five
years.
“There
is
a
striking
contrast
with
equities
in
emerging
markets,
which
made
up
only
4%
of
allocations
on
average
in
2023
–
half
the
8%
level
reached
in
2020
and
2021,”
said
UBS.
Real
estate
Apart
from
fixed
income,
real
estate
was
the
other
big
change
in
how
family
offices
invested
last
year,
according
to
UBS.
Globally,
the
average
allocations
to
this
asset
declined
to
10%
in
2023
—
down
from
13%
in
2022.
That’s
as
uncertainty
over
when
valuations
will
bottom
persists
and
yield-generating
assets
such
as
fixed
income
got
more
attractive,
said
UBS.
But
family
offices
plan
to
increase
the
real
estate
part
of
their
portfolios
—
to
12%
in
2024,
according
to
the
report.
LH
Koh,
managing
director
and
head
of
global
family
and
institutional
Wealth
(APAC)
at
UBS,
pointed
out
that
interest
rates
are
probably
the
major
factor
for
the
renewed
interest.
Real
estate
is
highly
sensitive
to
rates
—
which
are
expected
to
go
down.
Demand
is
also
driven
by
prevailing
economic
conditions
of
the
time,
he
pointed
out.
U.S.
stocks
and
AI
Family
offices
have
on
average
50%
of
their
portfolios
invested
in
U.S.
asset
classes,
according
to
the
study.
“[They
are]
building
on
a
multiyear
theme
of
increasing
their
investments
in
a
region
that
has
proved
resilient
to
high
policy
rates
and
geopolitical
risks,
while
offering
the
prospect
of
relieving
global
labor
shortages
through
AI’s
anticipated
productivity
gains,”
said
UBS.
In
terms
of
investing
by
theme,
AI
was
also
the
most
popular,
with
78%
of
family
offices
saying
it’s
likely
to
remain
an
area
of
investment
for
the
next
two
to
three
years.
That’s
followed
by
health
tech
(70%)
and
automation
and
robotics
(67%).
Elsewhere,
family
offices
are
investing
in
Western
Europe
–
in
sectors
such
as
luxury
goods
and
automation,
and
in
Asia
Pacific
(35%).
Greater
China
accounted
for
only
8%.
Here’s
how
they
are
planning
to
change
their
asset
allocation
by
region
in
the
next
five
years.
