Super rich seeking yield with fixed income, US securities and artificial intelligence
Ubs global study of 320 family offices reveals strong concerns about war conflict, climate change, excessive state debt
3' min read
3' min read
The rich are again favouring fixed income from more developed countries and more balanced allocations, confidence in active management is growing, and artificial intelligence (AI) is topping investment themes. Diversification and return are sought in alternative investments, which continue to form a significant part of portfolios. In the medium term, however, there is strong concern about the danger of a major geopolitical conflict, climate change and high debt levels. These are the main findings of the Ubs Global Family Office Report, the world's most comprehensive study of individual family offices.
Ubs Global Family Report
.Ubs surveyed 320 clients globally between 18 January and 22 March 2024 (it was 230 in 2023), representing households with an average net worth of $2.6 billion and covering over $600 billion in wealth. The report confirms itself as the most comprehensive and authoritative analysis of this important group of investors.
The 2024 survey showed that family office portfolios have returned to a greater balance between bonds and equities. This shift, which perhaps fits a world of moderate inflation and falling interest rates, seems to reflect the rise in bond yields and is consistent with the moves heralded by last year's report. On average, family offices kept their largest regional allocations in North America (50%), over a quarter (27%) in Western Europe and 17% in Asia-Pacific or Greater China. Looking ahead, North America and Asia Pacific (excluding Greater China) are set to be the top destinations for additional allocations, with over a third intending to increase allocations in each of these regions over the next five years (38% and 35% respectively).
Active management to diverify
.Just as balanced portfolios seem to be making a comeback, so is active management. Amidst rapid technological changes, changing rate expectations and uneven growth, the increased dispersion of returns offers opportunities for active management. Nearly 4 in 10 (39%) family offices globally say they are relying more on manager selection and/or active management to improve portfolio diversification, a 4% increase since 2023.
On the alternative investment front, hedge funds are used by a third (33%) of family offices. From a thematic perspective, generative AI is the most popular investment theme, with more than three-quarters (78%) of family offices stating that it is likely to be an important investment area in the next two to three years.
