Asian family offices lead on performance, growth capital exposure

Groups based in Asia and emerging markets generated an average return of 6.2% for the 12 months ended May 2019, compared to a global average of 5.4%. While volatile equities markets meant overall performance was weaker than the previous year, family offices in Asia and emerging markets prevailed over their peers due to a higher exposure to direct private equity investments, developing markets public securities, and commodities, the report said.

Asian family offices specifically generated a 19% return on their direct PE investments – the highest return of any asset class in any market – with fund commitments delivering 9%. The returns on direct real estate, real estate investment trusts and hedge funds, were 8.9%, 4.4%, and 3.3%, respectively.

Of the 360 groups participating in the study, approximately one-quarter are based in Asia Pacific. Alternatives account for 38% of the average portfolio – roughly in line with the global norm – and 16% of that is private equity, including 10% in direct investments and 5.2% in funds.

Their combined growth capital and venture exposure is comfortably the highest globally: 77% of Asian respondents are invested in growth assets, ahead of Europe on 73%, while 66% are in VC, ahead of North America on 62%. This is likely connected to the fact that minority investments account for a larger portion of the private equity industry in Asia than in other regions. It is worth noting that Asian family office exposure to buyouts and private debt is considerably lower than in Europe and North America.

Nevertheless, 70% of family offices respondents globally said they have more appetite for growth than anything else, while 57% said the same for venture. Technology is also the most popular sector for direct investments, ahead of real estate, financial services, and healthcare.

Private equity features strongly in most portfolios globally, with 73% of respondents invested in funds. However, they lean towards direct exposure, with 11% of the average portfolio in direct deals compared to 7.7% in funds. Within private equity programs, 54% of investments are direct, with the family office taking an active management role in 32%.

The average single-family office has a family net worth of $1.3 billion and assets under management (AUM) of $802 million. In Asia Pacific, the average net worth is $908 million and AUM is $600 million. More than two-thirds of the family offices surveyed globally were established in 2000 or later.

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• Topics
• LPs
• Performance
• Asia
• Family office