Hong Kong/London, 23 October 2014 – UBS, in partnership with Campden Wealth Research, has today launched a report on family offices in Asia-Pacific, Europe, North America, and developing economies. The research surveyed principals and executives in 40 Asia-Pacific family offices with an average size of USD 480 million assets under management. In total, participating Asia-Pacific family offices represented manage over USD 20 billion in private wealth.

Spanning key markets of Hong Kong and Singapore, including family offices domiciled in China and Australia, the report provides very specific insight on family office investments, structures and family purpose. The report highlights how Asia-Pacific offices have made significant progress in creating sustainable wealth management structures, as well as fostering important relationships across investment and business networks.

"In Asia, we are seeing more and more families professionalizing their family structures, implementing a governance framework for the family, the enterprise and the management of their assets, some of them by establishing a family office. This is one of the major trends as the second and third generations further assume roles of leadership within the family businesses in the region. We also see them exercising more diversification in their investment portfolio, although Asian family offices are still investing a lot in Asia-Pacific as they are more connected with peers and have a better knowledge of their home markets." said Kathryn Shih, Head of APAC, UBS Wealth Management.

"This report is the definitive work on family offices to date and provides a sound basis for family office principals, executives and service providers to benchmark performance and share best practice. We will continue our commitment in working with families to help them preserve and grow their wealth through the generations,” added Kathryn Shih.

"While Asia-Pacific performance lagged slightly behind offices domiciled in Europe and North America, our research attributed this largely to holdings of developing-economy equities and fixed income, which last year were surpassed by the meteoric rise of developed-economy equities. Asia-Pacific offices also reported higher operating costs than global counterparts, which were a result, largely, of a regional focus on costly, growth-oriented investment strategies. The fact that outsourcing is not prevalent dispels the common conception of Asia-Pacific family office dependence on external service providers," said Dominic Samuelson, Chief Executive Officer of Campden Wealth.

Investments

• Performance: The average Asia-Pacific family office investment portfolio returned an estimated 8% in 2013, with slight deviation across investment strategy and family office size (denoted by assets under management). 1 A number of family offices reported underperforming relative to their investment benchmark, a first occurrence in three years of UBS/Campden Asia-Pacific family office studies.
• Asset allocations: Asia-Pacific offices are focused on growth strategies; outperformance against benchmarks was attributed to significant allocations to direct investments (real estate and private equity) and smaller allocations to capital markets.
• Co-investing: Compared to global counterparts, Asia-Pacific family offices are the most active in all forms of co-investment, with almost all offices declaring some type of collaboration with other family offices.

Structures

• Costs: At 92 basis points, Asia-Pacific offices have the highest average operating cost of participating offices; investment activities accounted for just over half of operating expenses.
• Relationships with service providers: Offices in this region display noticeably higher degrees of in-house management of all aspects of an office's investment services. Globally, over half of investment-related expenditures – 21 basis points, on average – were allocated to external specialist firms. Family offices managing over USD 1 billion allocated 35 basis points toward outsourcing, compared to an average of 58 basis points for smaller offices.
• Beneficiaries: Globally, family offices reporting high levels of beneficiary involvement reported pursuing more aggressive, growth investment strategies, higher costs and lower performance against benchmarks.

Purpose

• Origins: Intergenerational wealth management is by far the most important objective of 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 d’être for family offices globally, regardless of family complexity.
• Accountability: 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 cost significantly more than families expected, while family professional services were cheaper than family members realised.
• Philanthropy: Philanthropy is an increasingly important function for family offices in Asia-Pacific: one-third of family offices have endowments of at least USD 15 million, with many focused on education and healthcare. Giving in Asia-Pacific increased by 10% since last year, with 77% of family offices in the region reporting some form of philanthropic engagement, placing the region on par with developing economy giving and slightly behind North American rates. Ten percent of Asia-Pacific offices reported endowments greater than USD 50 million.

For more information about the report, and to request a press copy, visit www.globalfamilyofficereport.com.

¹This 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 research@campdenwealth.com.

About the research: The Global Family Office Report 2014 is the result of proprietary research undertaken with family office principals, executives and beneficiaries in Europe, North America, Asia-Pacific, the Middle East, Latin America and Africa in the spring of 2014. Participants completed an extensive questionnaire and offered insight during in-depth interviews, typically lasting an hour, conducted by members of the Campden Wealth Research team. Participants were family office principals and executives managing the assets of families with private wealth exceeding USD 100 million. Offices managing 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 operate as financial intermediaries for retail clients, which are categorically different from traditional family offices. In addition to presenting cross-sectional analysis, where appropriate, the report makes use of longitudinal data compiled from Campden Wealth’s extensive archives of Asian, European and North American family office studies.

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 in-depth studies and comprehensive methodologies, Campden Research provides unique and proprietary data and analysis based on primary sources. For more information, please visit campdenresearch.com or email research@campdenwealth.com.

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 superior structural growth and profitability outlook.