This news service recently spoke to the firm about its recent move to step up operations in the Asia-Pacific region and how it works with family offices.
The population of Asia-Pacific family offices is rising fast, mirroring the ascending number of high net worth and ultra-HNW individuals across the region. As those numbers rise, so does their need for advice on investments and operations.
To plug into that trend, Cambridge Associates, the investment house, recently announced that it was setting up a Hong Kong office, adding to its Beijing and Singapore operations, hiring senior director Edwina Ho.
“In the last 10 years we have started to build investment work for Asia-based clients. There is a much bigger opportunity for us to tell our story,” Mary Pang (pictured), head of the Global Private Client Practice, Cambridge Associates, told this news service in a recent call.
“There is a lot of desire [in Asia] to learn from other countries’ family offices,” she said. “We are getting a lot of requests to understand governance. Culturally, here it is all about control.”
Pang knows that her firm is standing on a rising escalator. According to figures from 2019, out of the approximate figure of 7,300 single family offices, about 1,300 are in Asia – with that figure rising more than 40 per cent since 2017 (source: Campden/UBS Global Family Office Report). And Pang’s own situation underscores why Asia matters to Cambridge Associates. She used to be based in San Francisco before moving to Singapore.
As the cohort of first-generation business owners in Asia hands over the reins to successors – raising concerns about control and transfer – so family offices, along with independent wealth managers and external asset managers, have taken root. The shift also requires a changed mindset for families about how to manage wealth, contrasting with a more transactional approach in the past.
Families in Asia that have been creating wealth increasingly realise the need to diversify risk, Pang said.
“We are seeing second generations who are getting educated in the West, getting greater awareness of investing, and coming home, and getting involved in running the operating business,” she continued. “They [next generations] recognise they cannot do it all and need to professionalise and build a structure.”
As regularly reported in these pages, a big trend has been family offices’ enthusiasm for private market investments and taking direct stakes in companies, bypassing funds. We asked Pang if this trend has further to run.
“We certainly see value for families building long-term portfolios to consider an allocation to private investments such as venture capital and private equity,” she said. “Families are at varying degrees of comfort when allocating capital to the private market due to the longer lock-up periods, and their need to access liquidity. We wrote a paper about this exact topic, which speaks to our views on the merits of having an up to 40 per cent allocation in private investments. This holds for families focused on the long term and with the ability to move quickly with their allocations. As global families continue to seek returns, we feel there is more upside in this area of the market.”
Cambridge Associates tends to work with family offices with a minimum net worth of about $150 million; it has a research team to perform due diligence on thousands of managers.
“We get to know [managers’] general partners incredibly well,” Pang said. The firm’s networking with GPs is a big source of referrals, Pang continued.
Pang stressed that her colleagues don’t lecture clients on how their family offices should operate, but instead sets out ideas and lets clients work out the best routes for themselves.
“We aren’t here to tell people how to run their family offices,” she said.
One challenge in working with HNW families is the pandemic and associated social distancing controls imposed around the world.
Like every other business, Cambridge Associates’ ability to travel and see clients has “fallen off a cliff,” Pang said. “Our ability to do onsite visits with managers has been limited…we have been leveraging technology in the market as much as we can. 2021 has been one of our busiest years in terms of new clients wanting to work with us.”