As the world undergoes rapid technological change, family offices have reported a desire to seek exposures to such trends in their portfolio allocations.
UBS’ latest Global Family Office Report, which surveyed more than 300 family offices across seven regions of the world, found generative AI is the most popular investment, with nearly 80 per cent of family offices likely to invest in this area in the next two to three years.
This is closely followed by healthtech (70 per cent) and automation and robotics (67 per cent), although regional differences emerged, related to where the industries have the strongest domestic presence. Around 83 per cent of US family offices are likely to invest in AI, while 76 per cent of Swiss family offices are likely to invest in healthtech.
Other areas of interest include medical devices (59 per cent) and security and safety (52 per cent).
In the APAC region, UBS found philanthropy and charity emerge as popular thematics, with 45 per cent of family offices taking it into account.
Other top themes are healthcare (59 per cent) and climate tech or green-tech (40 per cent).
APAC family offices are more likely to focus on areas like impact investing (36 per cent), education (36 per cent), and carbon markets (21 per cent) than their global peers.
“It appears that sustainability is becoming an increasingly important topic affecting not just family offices’ investment portfolios, but also the long-term outlook of operating businesses,” UBS observed.
Globally, over half (57 per cent) of family offices with an operating business are either taking sustainability considerations into account already for their operating businesses or plan to do so in the future.
Finding the right approach to addressing the net zero transition and reducing emissions will be of key importance to some 49 per cent of family offices over the next one to three years.
Looking at risks, most family offices cited geopolitical risks among their top concerns.
Most (61 per cent) said they would take similar amounts of portfolio risk to 2023 in the next 12 to 18 months but described today’s geopolitics as “unsettling.” Over half (58 per cent) said they are concerned about the possibility of a major geopolitical conflict and its possible impact on their financial objectives, and this figure rose to 62 per cent over the next five years.
UBS also found climate change to be a long-term concern for almost half (49 per cent) of family offices, and nearly as many are concerned about a debt crisis at a time when Western countries are burdened by high levels of public debt that might appear unsustainable.
However, these appear to be concerns further down the line. Just 12 per cent and 20 per cent stated they are concerned about climate change and a debt crisis, respectively, with regard to their financial objectives over the next 12 months.
Reflecting on the research, Benjamin Cavalli, head of global wealth management strategic clients at UBS, said: “The enlarged and globally comprehensive dataset allowed us to deepen our analysis and gain insights on how family offices’ operating businesses impacted their asset allocation. This enables us to provide them with tailored findings and advice.”
