Family Office Investment strategies Trends
Family offices are a means of investment management for affluent families. Families or individuals outsource their entire financial management. Family offices provide their clients a wide range of services including tax planning, budgeting, insurance, etc. besides investment.
It is seen that family offices generally trend towards long term investment options as they are not looking for liquidity, and are in a position to absorb short term losses as the investment matures.
There are numerous investment options available to family offices. The manager who takes care of the investments suggests strategies based on the current market trends.
Let us briefly understand the prevailing trends in the market for family offices in 2017:
- Family offices are reducing their allocations to funds:
Family offices are not investing in Hedge funds due to their dismal performance, fees, and taxes. Current trends also indicate that family offices are opting for direct investments instead of private equity. This enables them to enjoy the advantages of diversification of the portfolio, management control, and higher returns.
- Family offices prefer direct investments:
Through direct investments, family offices can invest in the industry about which they are knowledgeable. It also allows them to enjoy tax benefits. However, it is recommended that a family waits for the right time and opportunity for direct investment.
- Family office investments are trending towards impact investments:
With the rising stress on sustainability and environmental issues, more and more affluent families are opting for impact investment. Impact investments also offer their investors multiple avenues. Hence, it is essential that a family office chooses the investment options with reliable financial returns. Impact investments have shown good financial returns in the recent times.
- A rise in the number of affluent individuals:
There has been an increase in the number of high net worth individuals globally. One of the reasons for this is that there is a growth in the number of start ups. It is also seen that these young entrepreneurs are more conscious of the social and environmental factors. Hence, they are opting for impact investment.
- Investment in Real estate:
Real estate is still one of the most popular investment strategies for family offices. It is considered as a bedrock asset for wealth creation and wealth preservation.
- Formation of investment clubs:
Family offices are now collaborating privately with other family offices to form investment clubs. Families collaborate with other families with whom they share similar values and approach to investing.
- Family Offices opting for long term investments:
Family offices are seen to opt for long term investments instead of short term. They prefer to invest in quality companies with low turnover and strong management teams. They invest in such companies that can withstand a slump in the market.
Hence we see that family offices are trending towards safe long term investments which offer them good returns. Investments in assets such as real estate still serve as a foundation. And, there are other avenues such as direct investments, etc. However, these trends are not constant. They keep changing with time.
Therefore, for a family office, it is difficult to analyze the trends of the market and invest. They will need the services of a professional to manage their investments. One of the leading financial consultants in Georgia, Atlanta is Greg Silberman. He manages the finances of a family office based on his experience and foresight.