Bookmark & Share
Family offices in Singapore recorded an average return of 1.2 percent last year, bucking the trend in the Asia Pacific region, which registered no returns on average, according to the latest Global Family Office Report by UBS and Campden Wealth Research.
Family offices are private investment companies that manage the assets of wealthy families.
The Straits Times reported that Asia Pacific family offices accounted for 19 percent of the 242 family offices surveyed. In Singapore, the average value of assets under management by family offices stood at US$753 million (S$1.07 billion), higher than the regional average of US$492 million (S$701 million).
Average returns in 2015 were significantly lower compared to the previous year, when Singapore family offices recorded an average return of 6.9 percent, higher than the global average of 6.1 percent. Figures for this year, however, have not been released.
Campden Wealth Chief Executive Dominic Samuelson attributed Singapore’s robust performance to family offices having more holdings in private equity than others in the region.
Asia Pacific family offices tend to prefer direct investments ini companies since they are composed of people who have been or are business owners, said August Hatecke, UBS Head of Wealth Management for Southeast Asia.
“They don’t want to just invest in liquid assets, like bonds and equities. They want to have a say in the management of the company, so they tend to invest in private investments as well as real estate, as these are businesses that they know and have an influence over,” he said. “They also want the second generation to stay as entrepreneurs.”
Hedge funds also lost their appeal among family offices, dropping nine percent of their global portfolio in 2014 to 8.1 percent in 2015. In Singapore, for instance, hedge funds accounted for just six percent of asset allocation, compared with 21 percent for direct private equity in companies.
“It doesn’t mean that the hedge funds are over, but families are challenged by the fee structures of such funds, so they are not entirely convinced that there is alpha there at the moment,” said Samuelson.
Cheryl Marie Tay, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories, email cheryl@propertyguru.com.sg
Related Articles:
Office, retail space prices and rents decline in Q3
OUE C-REIT DPU jumps 29.4% in Q3
Ascendas-Singbridge completes first fibre ready installation at Ascent