The study of Asia-Pacific region family offices sheds light on what concerns them, both their investment views, and how – at least for now – they're not that keen on ESG ideas, in spite of all the positive arguments for that area.
A study of more than 50 single- and multi-family offices in Asia by research firm Preqin found that inflation (80 per cent), rising interest rates (70 per cent), and geopolitical risk (67 per cent) are their principal concerns.
The report, which draws on Preqin data and industry experts, also found that almost three quarters (73 per cent) of respondents plan to maintain or increase their exposure to alternatives in the next 12 months. This stance comes as family offices seek ways of managing exposures to market risks, it said.
The findings are outlined in the APAC Family Office Report 2023.
For all the continued enthusiasm for alternative investments, there are concerns. Nearly half of the family offices surveyed (46 per cent) expect that their private equity portfolios will not perform as well in the next 12 months as they did in the previous 12 months. This is mainly due to valuations resulting from the stock market decline, which 27 per cent of respondents cited as a market concern.
For venture capital, a larger proportion (31 per cent) now plan to allocate less capital, rather than more (23 per cent), in the asset class over the next 12 months.
The study found that family offices in Asia-Pacific haven’t shown the same level of enthusiasm for ESG investment policies compared with institutional investors globally. Some 37 per cent of family offices had an ESG investment policy, while 43 per cent did not and had no plans to adopt one.
By 2026, Asia is expected to surpass Europe as the second largest regional wealth hub, Preqin said. This growth has created more demand for family offices to manage the needs of these newly-wealthy families.
The Preqin commentary comes at a time when wealth management centres such as Singapore and Hong Kong are battling to be the locations of choice for family offices, with both jurisdictions creating structures and laws to attract these institutions.
“Looking ahead, as family offices in APAC evolve and mature, they will face new opportunities and challenges in the changing global landscape,” Harsha Narayan, managing editor and lead author of the report at Preqin, said. “Younger generations will continue to leverage technology and investment experts to diversify and strengthen their portfolio against market risks, while remaining cognisant of their family legacy and how they can create impact for their own families, as well as wider society.”