Family Office Investment Management Strategies

Family offices are a means of investment for ultra rich families. They are operated by experienced investment personnel. Family offices diversify their portfolio by investing in traditional and alternative investments. Family offices aim to control the investments with strong management teams. They may start with minority investments which have the potential to become controlling over time.

Some of the investment strategies for a family office are:

Private Equity

Private equity refers to a type of equity and an asset class that comprises equity security and debt in operating companies not traded publicly in a stock exchange. Private equity offers family offices the flexibility of diversification and the potential for higher returns. Hence they are a popular investment option for family offices.

Venture Capital

It is a form of financing or private equity provided to small enterprises that show great growth potential. Family offices invest in these funds in exchange for equity or ownership stake. With a growing number of start-ups, investing in them is a popular option for family offices. The trend seen is that family offices invest in companies that are reinventingthe old world industries.

Hedge Funds

These are a means of alternative investment where funds are pooled by different investors. These funds are invested using different strategies to earn returns on the investment. The recent trends indicate that that family offices are losing confidence in hedge funds and seeking other investment options.

Commercial Real Estate   

Commercial real estate refers to commercial property that is leased out for purely business purposes. It could be a shopping center, office space, restaurants, strip malls, etc. Family offices invest in commercial real estate to earn high returns and income. The trend in family office investments indicates new clients looking to invest in commercial real estate and older clients increasing their stakes.

Stocks

This is a method of equity investment which makes the investor a part owner of the corporation. This makes him eligible for part of the corporation’s earnings and assets. This is a traditional investment method that family offices also opt for.

Bonds

Bonds serve as a means of fixed income. Family offices invest in bonds with maturities that may be long term or short term.

Direct investments

Family offices also make direct investments in companies by either purchasing them or funding their growth.

These are some of the popular family office investment strategies. Family offices can select a combination of these for the management of their investments. Choosing the appropriate investment strategies can be quite a challenge as most investors are oblivious of the nuances of the financial market. Hence, the best way is to seek the advice of a professional for this.

Greg Silberman is an experienced financial consultant in Georgia, Atlanta region. He offers his services to individuals, families, and institutions. He has been engaged by many affluent families to manage their wealth.