The wealthiest families in Europe suffered the lowest investment returns in five years as they held high cash and property exposure, which puts more pressure on them to preserve wealth rather than create it in the foreseeable future, research from Campden Wealth shows.
In a report, Back to Business – Family Offices Adapt to the New Normal, it was found that average annual returns were a relatively meager 3.6 per cent among single family offices and 2 per cent for multi-family offices for the 12 months to the middle of 2012.
Campden Wealth’s report, now in its fifth year, surveyed a total of 60 SFOs and MFOs, each managing assets worth between €50 million ($65 million) and €1.5 billion.
As the financial crisis took hold, SFOs moved out of equities and bonds into more direct and physical assets such as cash and commodities. These organizations also boosted exposure to such “real assets” as farms, forests, art collections and antiques. With multi-family offices, their asset allocation to emerging markets rose to 20 per cent in 2012 from 14 per cent a year earlier. Despite recently disappointing returns, some family offices report a tendency for increased allocations to higher-risk asset classes in the next three years, the report said.