Family offices cited politics, stunted economic growth and interest rates among their top market-related concerns at JP Morgan Private Bank’s inaugural Family Office Summit in San Francisco, CA.

Family offices cited politics, stunted economic growth and interest rates among their top market-related concerns at JP Morgan Private Bank’s inaugural Family Office Summit in San Francisco, CA.

Advisors, investors and philanthropists representing $200 billion in assets from some 60 family offices in the Western US attended the event last month.

Of those surveyed, 60 per cent said politics will be the biggest threat to the markets looking ahead, while 18 per cent and 13 per cent believe that economic growth and interest rates, respectively, are the greatest causes for concern. 

As regards performance across asset classes, 67 per cent anticipate that equities will be the star of the show over the next year. Within this asset class, respondents are largely (42 per cent) betting on emerging markets - regardless of recent “disparate” performance, JP Morgan said - followed by Europe (35 per cent), the US (19 per cent) and Japan (4 per cent). Meanwhile, hedge funds were identified by 45 per cent as the most attractive replacement for core fixed income.  

In other findings, almost all respondents said they would need to see ten-year interest rates move 150 or 250 basis points higher in order to buy bonds (44 per cent and 51 per cent respectively).

Meanwhile, the audience was split on projections as regards when the Federal Reserve will begin to raise short-term interest rates, JP Morgan noted. While 35 per cent of respondents felt rates will hold for another 18 months and 38 per cent think it will be two years before the Fed does increase short-term rates, 20 per cent felt it could be three years before any such action is seen.

Philanthropy

“Philanthropy remains a top focus amongst family offices,” said Jeremy Geller, market manager for Northern California at JP Morgan Private Bank. “Our ultra high net worth clients are increasingly concerned with seeing the results of their contributions, hands-on involvement and making giving a perpetual and central part of their wealth planning.”

Highlighting this, 76 per cent of respondents said their families were “very involved and hands-on” when it comes to philanthropy.

Specifically, over half (52 per cent) cited education as the area most important to their family in 2013, while 19 per cent cited health as their main area of focus. Most respondents said they would give the same level (34 per cent) or more (59 per cent) than last year.