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Campden Wealth Global Family Office Report 2014 | Campden Wealth 7/28/17, 12(23 PM

Campden Wealth Global Family Office

Report 2014
18 September, 2014




Reported overall investment portfolio returns

fuelled by allocations to developed-market

equities, real estate direct investments

18 SEPTEMBER 2014 UBS, in partnership

with Campden Wealth Research, has

today launched a report on family offices in Europe, North America, Asia-

Pacific, and

developing economies1. The research surveyed principals and executives in

205 family

offices with an average size of USD $890 million assets under management.
In total, the

family offices represented manage over USD $180 billion in private wealth.

Spanning six continents and over 40 countries, this years report provides
very specific Page 1 of 14
Campden Wealth Global Family Office Report 2014 | Campden Wealth 7/28/17, 12(23 PM

insight on a wide range of family office topics, from performance and asset

to structures and origins of wealth. Against initial expectations, the survey

highlights a

high degree of common ground across family offices globally and will provide
a sound

basis for benchmarking and sharing best practice. This study is the definitive
work on

family offices to date and one from which family office principals, executives

service providers can glean actionable insight, said Philip Higson, Vice
Chairman, UBS

Global Family Office Group.

Performance driven by the quest for growth

Globally, family offices reported strong performance in 2013. The average

family office

investment portfolio returned an estimated 9% on the year, with slight

deviation across

regions, investment strategy and family office size (denoted by assets under

management).2 North American and European family offices were most

likely to report

outperformance against benchmarks, followed by offices domiciled in Asia- Page 2 of 14
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Pacific and

developing economies.3 Across all regions, offices pursuing growth-based


strategies were most likely to report outperforming against investment


1 For the purposes of the study, developing economies denotes Africa, Latin
America and the Middle East.

Asia-Pacific was treated as an independent, developed wealth management

market; this is the first global

family office to do so.

2 This estimate (1) is based on weighted averages of 2013 actual performance

for asset class indices in

USD and (2) assumes a constant allocation for the full year. For individual
asset class allocations and

performance indices, please contact

3 Almost half of North American family offices reported outperforming

against benchmarks in 2013, the

same proportion of offices elsewhere meeting benchmarks.

The Great Rotation from Fixed Income into Equities

Critical to this performance were substantial holdings of developed-market

equities. Page 3 of 14
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While the typical family office portfolio was diversified across traditional
asset classes,

developed-market equities and real estate direct investment comprised

almost a third of

portfolios. The report found evidence of the Great Rotation moving


allocations out of fixed income and into equities signature evidence of the
overall shift

toward balanced and growth strategies in family offices globally. Offices still

wealth preservation strategies most of which were domiciled in Europe

on average

allocated 15% of portfolios to developed-market fixed income. This allocation

is over

twice as much as holdings reported by growth-oriented offices.

Co-investing takes hold

Another key finding of the report is the prominence of co-investing among


offices globally. Overall, four-fifths of family offices reported participating in


or investment bank-syndicated private equity deals in the last year. Deal size
was Page 4 of 14
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remarkable: in 2013, participating family office syndicated deal size averaged

USD $76

million, while those offices collaborating on private equity deals averaged


USD $119 million. Regionally, offices located in Asia-Pacific were most likely
to coinvest,

followed shortly by developing economy family offices. European and North

American family offices were less likely to conduct direct investments, though

longitudinal data suggests an uptrend in both regions.

Environmental, social and corporate governance considerations curb


While environmental, social and corporate governance (ESG) considerations

were not

prevalent among family offices, these considerations were most likely to


strategic and tactical asset allocations. Regionally, developing economy and


Pacific family offices placed the most emphasis on ESG when choosing

Strikingly, those offices giving credence to ESG were least likely to


against their benchmarks. Page 5 of 14
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Additional key findings

Structures: Costs, Services and Beneficiaries

Family office costs are driven by investment strategy, management approach

The average family office spends 86 basis points on operating costs, of which

investment activities account for almost half.

The most demonstrable factor for operating costs was investment strategy:

family offices pursuing growth strategies spent, on average, 94 basis points,

compared to 75 basis points spent by offices pursuing wealth preservation

strategies. Growth-oriented offices also outsourced less responsibilities to

external service providers.

Investment-related services costs account for 40 basis points of total family

office costs globally, significantly higher than other services (general

advisory services cost 19 basis points, administrative activities garner 15

basis points and family professional services merit 12 basis points, on

average). Over half of investment-related expenditures 21 basis points, on

average go toward external specialist firms.

Globally, the majority of services were provided in-house, but European,

Asia-Pacific and North American offices seem to be trending toward Page 6 of 14
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outsourcing specialised services, such as tax planning.

External service providers are key partners in nascent wealth markets

Family offices in developing economies and Asia-Pacific attributed the most

value to their relationships with private and investment banks, reflecting the

emergent state of the family office environment in developing wealth


namely the scarcity of suitable, quality service providers tailored to family



Larger family offices reported higher overall levels of independence, having

assumed more in-house responsibility for the management and execution of

investments. Family offices managing over USD $1 billion allocated 35 basis

points toward outsourcing, compared to an average of 58 basis points for


offices. Family offices that outsourced investment management were the least

likely to outperform against investment benchmarks.

Beneficiary involvement hinders family office performance

Fifty-five per cent of family offices reported employing a beneficial family

member as a full-time member of staff, with almost a quarter of offices

hosting Page 7 of 14
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beneficiaries as part-time employees.

Beneficiary involvement was highest in developing economies and Asia-


with beneficiaries on average involved weekly in office operations; North

American beneficiaries were less involved, reporting quarterly oversight of

office activities.

Family offices reporting high levels of beneficiary involvement reported

pursuing more aggressive, growth investment strategies, higher costs and


performance against benchmarks.

Purpose: Origins, Accountability and Philanthropy

Family offices are designed ensure intergenerational wealth transfer

Intergenerational wealth management is by far the most important objective


family offices, followed by the consolidation of accounting and tax functions

and, thirdly, family unity. These priorities hold regardless of the degree of

divestment of family wealth, demonstrating a clear raison dtre for family

offices globally, regardless of family complexity.

Family office structures do not always meet family expectations Page 8 of 14
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Whereas family members rated investment-related services most important,

across family offices globally the relative value of these services was smaller

than the actual costs offices spent on these services. Managing investments

more than families expect, while family professional services are cheaper

family members realise.

Risk on

Although family-related risk (reputation, data and confidentiality) is ranked


most important risk management category by families, this risk category

received little attention when it came to the actual implementation of formal


management policies and external oversight of independent controls.

Investment risk and banking risk, which trailed family-related risk in


importance, fared better, being almost twice as likely to receive formal,

structured attention, in aggregate.

Family office management of family philanthropy is growing and


Most offices are involved in philanthropy, including strategic and Page 9 of 14
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features of their philanthropic engagements.

One-third of family offices have endowments of at least USD 10 million,


focused on healthcare and education sectors.

Giving in Asia-Pacific increased by 10% since last year, with 77% of family

offices in the region reporting some form of philanthropic engagement,


the region on par with developing economy giving and slightly behind North

American rates.

While Europe hosts offices with the largest philanthropic endowments,

almost a

third of offices in the region do not manage the familys philanthropy, more

the rest of the regions combined.

To read the full report, please visit

--- Ends ---

For further information please contact:

Andrew Porter

Director of Research, Campden Wealth Page 10 of 14
Campden Wealth Global Family Office Report 2014 | Campden Wealth 7/28/17, 12(23 PM

30 Cannon Street, London, EC4M 6XH, UK

+44 (0) 20 3763 2806

Philip Higson

Vice Chairman, UBS Global Family Office

Notes to Editors:

About the research

The Global Family Office Report 2014 is the result of proprietary research

with family office principals, executives and beneficiaries in Europe, North


Asia-Pacific, the Middle East, Latin America and Africa in the spring of 2014.

Participants completed an extensive questionnaire and offered insight during


interviews, typically lasting an hour, conducted by members of the Campden


Research team. Participants were family office principals and executives

managing the

assets of families with private wealth exceeding USD $100 million. Offices
managing Page 11 of 14
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assets of significant value on behalf of more than one family are included in
the study

and comprise 20% of the sample. The study excluded multi-family offices that

as financial intermediaries for retail clients, which are categorically different


traditional family offices.

The Global Family Office Report 2014 provides an analysis and evaluation of

current and prospective outlook of family offices around the world. By

focusing on the

relationship between office structures and investment strategy, as well as the

ways in

which family involvement and family objectives for the office affect these
structures and

strategies, this report provides a comprehensive analysis of the current,

global family

office environment. In addition to presenting cross-sectional analysis, where


the report makes use of longitudinal data compiled from Campden Wealths

archives of Asian, European and North American family office studies. Page 12 of 14
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About UBS

UBS draws on its 150-year heritage to serve private, institutional and

corporate clients

worldwide, as well as retail clients in Switzerland. Its business strategy is

centered on its

pre-eminent global wealth management businesses and its leading universal

bank in

Switzerland, complemented by its Global Asset Management business and its

Investment Bank, with a focus on capital efficiency and businesses that offer a

structural growth and profitability outlook. Headquartered in Zurich and


Switzerland, UBS has offices in more than 50 countries, including all major

centers, and approximately 60,000 employees. UBS AG is the parent

company of the

UBS Group (Group). Under Swiss company law, UBS AG is organized as an

Aktiengesellschaft, a corporation that has issued shares of common stock to


The operational structure of the Group comprises the Corporate Center and
five business

divisions: Wealth Management, Wealth Management Americas, Retail & Page 13 of 14
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Global Asset Management and the Investment Bank.

About Campden Wealth Research

Campden Wealth is the leading independent provider of education,

information and

networking for generational family business owners and family offices

globally in

person, in print, via research and online. Campden Research supplies market
insight on

key sector issues for its client community and their advisers and suppliers.
Through indepth

studies and comprehensive methodologies, Campden Research provides


and proprietary data and analysis based on primary sources. For more

please visit or email Page 14 of 14