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Global family offices see market downturn in 2020, boost cash reserves, poll finds

By Asia Asset Management  
September 27, 2019

Global family offices are deleveraging and boosting their cash reserves ahead of a market downturn that they expect next year, according to the Global Family Office Report 2019.

The report, published by the UK’s Campden Research and Swiss investment bank UBS, says 45% of family offices polled earlier this year are realigning their investment strategy to mitigate risk, and 42% are raising their cash reserves.

Some 55% of respondents expect a market downturn to start in 2020.

The findings are based on a survey of 360 family offices carried out between February and May 2019. Some 36% of respondents are from North America, 32% from Europe, 24% from Asia Pacific, and the rest from emerging markets. About 80% of respondents are single-family offices.

Rebecca Gooch, director of research at Campden Wealth, the parent company of Campden Research, says family offices are cautious about geopolitical tensions.

“There is a widespread sense that we’re reaching the end of the current market cycle. While the average family office hasn’t made wholesale changes to its portfolio, many have been building up cash reserves and deleveraging their investments in anticipation of disruption ahead," Ms. Gooch says in a statement accompanying the report on September 24.

The report says the only asset classes that saw increased allocations are developing-market bonds private equity funds, direct real estate investments, and cash or cash equivalent.

Allocations declined the most in three asset classes: developed market equities, developed market bonds and hedge funds.

The report says family offices posted a return of 5.4% in the 12-month period immediately prior to the time they responded to the survey.

The biggest average returns were from private equity, at 16%, real estate, 9.4%, and developed market equities, 2.1%.

Family offices polled had US$917 million of average assets under management, and average family wealth of $1.2 billion.