Notes

The Rise of the Family Investment Office
Family investment offices are an integral component of wealth management and estate planning strategies for wealthy individuals. They assist their client to manage assets, protect their wealth and create value without needing full-time employees or HR support, often without the need for full-time staffing or oversight.

Family offices have historically invested in public markets through a range of asset classes such as stocks, bonds, real estate and commodities around the world. Recently however, they have also expanded their portfolios to include direct investments into private equity and venture capital opportunities.

This growing focus on private investment deals reflects a broader trend in family office investing towards 'performance with purpose', where they seek to align their returns with social objectives. They are increasingly investing in areas such as healthcare, technology and sustainability.

According to a 2021 UBS report, these life-altering industries and technologies are driving an increase in private equity and venture capital investments . More than 80% of family offices currently invest in this sector, while digital financial assets like cryptocurrencies and blockchain are on the rise as well.

Digital financial assets may be seen as risky, but they offer the potential for high returns. That has made them increasingly attractive to affluent families looking to diversify their portfolios.

Family offices are increasingly investing in philanthropic activities in addition to private equity and venture capital. More than 75% of family offices are investing in various causes that align with their investment objectives and values, with 40% planning on increasing their allocations going forward.

Family offices are increasingly making purpose-driven investments, as this helps them align their interests and priorities with those of their clients. A significant portion of these investments is being made in education, climate change mitigation and healthcare - 46% of those surveyed by Campden Wealth having invested in these areas as of 2022.

A global shift in attitudes toward social justice and environmental care has informed family office investment strategies, with over 56% of those surveyed by UBS engaged in sustainable or ethically-minded investing - reflecting a trend among the general population which has now reached 52%.

This growth is primarily caused by the next generation of leaders taking control of these issues. Furthermore, many investors are increasingly reevaluating their strategic asset allocations in light of the longer-term, multigenerational consequences of their decisions.

William Sels, Global Chief Investment Officer at HSBC, suggests a diversified portfolio that aligns returns with specific drivers of inflation can be an effective hedge against equity and fixed income volatility in a declining market environment. He advises family offices to reevaluate their portfolios as doing so will likely generate long-term sustainable returns rather than simply seeking short-term gains or recoupments.

A comprehensive investment policy statement is an indispensable asset for family offices as it aligns investments with their clients' strategic objectives. This document serves as a formal blueprint that outlines their overall investment approach, including how they will invest their wealth and what types of investments they make.
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