Assets of APAC family offices rise, thanks to strong public, private market gains: study

DESPITE challenges arising from the Covid-19 pandemic, wealth levels of the richest families in the Asia-Pacific rose, with 29 per cent reporting a significant increase.

The Asia Pacific Family Office Report 2021 found that 75 per cent of families in the survey saw their wealth rise over the past 12 months, thanks to a confluence of factors - rising asset prices, unprecedented stock market gains, the tech boom, and record dealmaking and valuations in private markets.

Among the region's family offices, 72 per cent saw a rise in assets under management (AUM), and the rise was significant for 26 per cent.

The study, jointly published by Raffles Family Office and Campden Wealth, found that half of Asia-Pacific family offices are realigning their portfolios towards more growth-oriented investments, significantly more than families in Europe (35 per cent) and North America (32 per cent).

Rebecca Gooch, senior director of research at Campden Wealth, said: "Looking at this research from a global perspective, we can see that despite the pandemic, both families and family offices fared exceptionally well... In the midst of these difficult times, family offices, known for being nimble investors with deep pockets and patient capital, have shown their strength at not only riding the economic wave, but also shifting the winds in their favour."

A total of 385 family offices were surveyed globally between April and July 2021, of which 76 were from the Asia-Pacific. Of these, 20 per cent were based in Singapore. In-depth interviews were conducted with 32 family office executives globally, of whom 8 were from the region.

Among Asia-Pacific respondents, 91 per cent represented single family offices, and the balance from private multi-family offices. The latter is defined as non-commercial family offices that serve up to 8 families, and the core family holds at least half of the office's total assets.

The average family wealth in Asia-Pacific is US$1.6 billion, and the total estimated wealth stands at US$122 billion. Family offices in the region manage on average about US$812 million in assets. In aggregate, the total AUM is around US$62 billion. Family offices in the region tend to serve the first and second-generation wealth owners, and nearly 60 per cent of offices were established post-2000.

Chi-man Kwan, group chief executive and co-founder of the Raffles Family Office, said the report, like earlier editions, "delivered important insights on the investment preferences of some of the world's wealthiest families".

"The key findings from our 2021 Asia Pacific edition validated many of the shifts we have witnessed and made provisions for in the course of our business, which caters both to ultra-high-net-worth families and their family offices. Chief among these shifts is the increased appetite for growth-oriented investments. We have seen an especially strong preference for private equity deals in Asia and are receiving a growing number of enquiries relating to digital assets."

The average portfolio return of Asia-Pacific family offices was 15 per cent, led by public equities (25 per cent) and private equity (23 per cent).

The majority (80 per cent) of Asia-Pacific families are optimistic about the economic climate and believe 2022 will be a year of economic recovery. In line with this, 59 per cent are seeking new investment opportunities, and 41 per cent seek to diversify their portfolios.

Notably, 80 per cent of family offices in the region invest in private equity, with a preference for direct investments (57 per cent) over funds (43 per cent). Families also prefer an active management role in direct investments (32 per cent). The most popular private equity deals are venture capital direct investments at 59 per cent, compared to the global average of 53 per cent.

Allocations into sustainable investments are expected to nearly double by 2026. Currently, 57 per cent of offices have sustainable investments, and the average portfolio share rose from 23 per cent in 2020 to 26 per cent in 2021. This is expected to climb to 43 per cent within the next 5 years.

In terms of regional exposure, 54 per cent of family offices globally plan to increase their investments in the Asia-Pacific. Among offices based in the region, 77 per cent plan to raise their regional exposure.

Asia-Pacific family offices' exposure to equities was 33 per cent in 2021 - 14 per cent to developed markets and 19 per cent to emerging markets.

About 19 per cent invest in cryptocurrency, less than the 28 and 31 per cent exposure among European and North American family offices, respectively. A third of Asia-Pacific family offices aim to invest in cryptocurrency in 2022.

Special Purpose Acquisition Companies are also an area of interest. While the vehicles currently account for just 2 per cent of the average Asia-Pacific family office's portfolio, about a third want to raise their exposure.