Family offices increase appetite for risk
Family offices’ appetite for risk is set to increase over the next year due to improved regulation of risker assets, according to new research from Ocorian.
Ocorian found 82 per cent of family offices professionals, including those working for multi-family offices, believe their organisations’ appetite for risk will increase with 12 per cent expecting a dramatic increase.
Around 62 per cent who expect a rise in investment risk appetite said increased regulation around riskier assets is the key reason, while 55 per cent said they believe inflation has peaked or will soon peak and that is creating an increased risk appetite.
Around 47 per cent pointed to increased transparency around riskier assets, while 44 per cent said they believed markets were set to recover.
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Ocorian’s international study of 309 family office professionals found almost all (99 per cent) agreed the switch to investing in alternative assets among family offices is a long-term trend.
The investment managers interviewed were collectively responsible for assets under management of around $155bn and included 201 working for multi-family offices.
More than half (51 per cent) said the Middle East is the jurisdiction most likely to see an increase in exposure to alternatives, compared with 40 per cent selecting the European Union and 38 per cent the UK.
More than two-thirds (68 per cent) believe family offices are most likely to use funds as their preferred structure compared with 66 per cent selecting GPLP structures and 44 per cent special-purpose vehicles.
Infrastructure and private debt are forecast to be the alternative asset classes seeing the biggest increases in allocations over the next two years. Around 26 per cent questioned predict allocations to infrastructure to increase by 50 per cent or more while 23 per cent predict the same level of increase in allocations to private debt.
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“Family offices’ appetite for risk is increasing rapidly after many years when many were heavily focused on cash and took a very cautious approach to investing,” said Ocorian global head of private client Annerien Hurter.
“The long-term trend of family offices increasing their exposure to alternative asset classes is certainly a factor in the growing appetite for risk and it is clear that improvements in regulation around riskier assets is proving popular with family offices. It remains essential for advisors and service providers alike to deeply understand the unique risk appetite and governance needs of each family, ensuring transparency and trust in every decision.”
Bovill Newgate partner Mark Spiers added: “It’s encouraging to see that family offices are becoming more comfortable with increased risk, particularly in alternative asset classes such as private debt and infrastructure, as they recognise the potential benefits of diversification and enhanced transparency. As regulatory oversight continues to evolve, it’s essential that family offices work closely with their advisors to navigate this complex environment and ensure that all investment decisions are aligned with both their long-term objectives and regulatory obligations.”
Ocorian is a global provider of services to high-net-worth individuals and family offices, financial institutions, asset managers and corporates.
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