Private, Listed Equity And Farming Seen As Best Assets For Next 30 Years - UHNW Survey

Tom Burroughes

16 December 2013

Private equity, listed stocks and agriculture offer the three most likely routes to build wealth over the next three decades, a survey of ultra high net worth families and advisors finds, while it also shows fears have risen about political risk and the damaging impact of tax and regulation.

The survey, conducted by , the multi-family office, covers families and advisors together holding a total of more than £100 billion of assets.

Among the highlights of the survey is that property takes top billing (55 per cent) as the “alternative” asset class; a large majority of respondents consider London as a “suitable” asset class for the next 30 years. The average London Central prime residency is expected to rise in price to more than £6 million. Half of those surveyed expect there will be another financial crisis over the next 10 years; some 63 per cent of respondents predict the euro will survive.

The report, entitled The World in 2043: wealth strategies for intergenerational success, drew on responses from 90 UHNW families and advisors and asked about expectations for the period between now and 2043.

Perhaps unsusprisingly given expectations of rising inflation and a low-yield environment, equities are seen as offering some of the most attractive returns, bonds and cash are seen as providing the worst.

Long term perspective

The important of taking a long view is stressed by the report; almost half (46 per cent) of respondents favour an investment horizon greater than 10 years, with some 19 per cent advocating an intergenerational/30-plus time period, the survey showed.

Almost three quarters of UHNWs and advisers identify real capital preservation as their greatest challenge; they also highlight six recurring threats to wealth preservation, the biggest of which is a lack of strategic planning, followed by excessive risk taking, disputes, wealth fragmentation, inflation and taxation. Half of respondents anticipate another financial crisis over the next ten years, and have also grown more fearful of high market volatility, of inflation rising steeply and of political risk.

“With UK adults expected to hand down as much as £5 trillion over the next generation, helping our clients successfully navigate the next 30 years is our primary focus. Preserving, and growing wealth, have become ever more challenging in the current low yield environment. Post 2008, investors have also grown more fearful of volatility,” Ian Marsh, CEO of Fleming Family & Partners Asset Management, said. .

UHNW individuals are more worried about political risk and some 75 per cent identify this as one of the top five issues they are most concerned about compared with five years ago. They also increasingly fear the eroding impact of taxation and inflation, but they highlight their belief that sensible and disciplined investment and tax planning strategies should mitigate these, the survey said.

Other data

A majority, (56 per cent), advocate a hybrid approach to family discretionary investment, drawing on in-house expertise to directly manage investments, whilst also working with investment advisors to access the best external asset managers.

More respondents believe emerging market equities will perform best over the next 30 years, with 27 per cent ranking it first, ahead of any other asset class.

Some 67 per cent of respondents say the UK will still be in the European Union in 2043; some 63 per cent believe the euro will still exist in 2043; a large majority (80 per cent) expect the dollar will still be the world’s reserve currency in 2043 and 81 per cent are optimistic about the UK’s relative economic performance over next 30 years compared with other developed countries.