Asia Pacific poised to be top investment destination for family offices globally: UBS report

Asia Pacific is set to be the top investment hotspot for family offices globally, according to the UBS Global Family Office Report 2024.

The report — which drew insights from 320 single family offices across seven regions with an average net worth of US$2.6 billion — found that on average, family offices have kept their largest regional allocations in North America (50%) and Western Europe (27%), followed by 17% in either Asia Pacific or Greater China.

Moving forward, North America and Asia Pacific, excluding Greater China, are set to be the top destinations of added allocations, with over a third looking to increase allocations to each of these regions over the next five years at 38% and 35%, respectively.

“Almost half of Asia Pacific family offices plan to allocate more assets to Asia Pacific over the next five years,” says Benjamin Cavalli, head of global wealth management strategic clients at UBS.

The report also found that family office portfolios moved back to a greater balance between bonds and equities. Cavalli notes that Asia Pacific family offices plan to add fixed income (48%) and developed market equities (45%), private equity (24% in direct investments and 32% in funds) as well as hedge funds (31%) over the next five years.

“Private equity and hedge funds continue to be the favourites amongst family offices to keep their portfolios well-diversified and achieve better investment returns,” he further adds.

Active management also appears to be back in favour. Amid rapid technological change, shifting rate expectations and uneven growth, the increased dispersion of returns offers opportunities for active management, according to the report. Almost four in 10 (39%) family offices globally state that they are currently relying more on manager selection and/or active management to enhance portfolio diversification, up 4% from 2023.

From a thematic perspective, generative artificial intelligence is the most popular investment theme, with more than three-quarters (78%) of family offices stating it is likely to be an area of investment in the next two to three years.

Specifically among Southeast Asian family offices, 88% believe positive US real interest rates would last longer. These family offices rely more on manager selection and/or active management to diversify (50%).

Compared to their global peers, the family offices in Southeast Asia also have the lowest allocations to real estate on average at 6%. Their top concerns in the next 12 years are a major geopolitical conflict and higher inflation, while higher taxes and climate change are their top concerns over the next five years.

The report also highlights that sustainability is becoming an increasingly important topic — affecting not just family offices’ investment portfolios, but also the long-term outlook of operating businesses.

Philanthropy and charitable giving appear especially popular in Asia Pacific, with 45% of family offices saying they currently take it into account. Healthcare is also the top theme for 59% of the region’s family offices.

Other top sustainability themes of Asia Pacific family offices include clean tech, green-tech, climate tech (40%) and philanthropy (39%). Compared to their global peers, the region’s family offices are more likely to focus on impact investing (36%), education (36%) and carbon markets/carbon capture and removal (21%).

In its fifth edition, the UBS Global Family Office Report 2024 survey was conducted between January 18 and March 22.