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Asian family offices seek to increase alternatives allocations

Family offices continue to look for portfolio diversification amid a backdrop of inflation, according to a report by Raffles Family Office and Campden Wealth.
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As inflation continues to rise, more than half of family offices (54%) in Asia Pacific are looking out for new investment opportunities, with 42% saying they are searching for alternative investments, according to a report from Raffles Family Office and Campden Wealth.

For family offices that are looking to adopt strategies to hedge against inflation, 52% have increased their exposure to real estate, 50% to equities and 29% to commodities.

34% of investors also indicated that they have reduced the duration of their bond portfolios.

“At Raffles Family Office, we have seen an increase in allocation to alternatives – about 20-25% of assets managed here are in non-traditional products, such as private equity, credit and real estate,” said William Chow, deputy group CEO at Raffles Family Office.

“As diversification begins to gain importance, especially during times of market turmoil, we expect to see this figure continue to increase in the next few years, with family offices looking to generate alpha and achieve optimal risk-adjusted returns in comparison to public assets.”

The report also found that Asia Pacific family offices’ interest in sustainable and technology themes continues to rise.

42% of family offices responded that they are now engaged in sustainable investing, with 29% of their portfolios dedicated to sustainable investments.

That is an increase of four percentage points from last year, and two percentage points higher than the global average of 27%.

Meanwhile, regarding technology, around 62% of family offices said they have already invested in green tech and are expected to increase their investments there followed by digital transformation (52%), artificial intelligence (44%), biotech (42%) and healthcare (38%).

Despite the decline in the price of cryptocurrencies, 59% of family offices that have invested in cryptocurrencies continue to hold their allocation, with 25% actively wanting to increase their investment, the report found.

The report also found that 70% of family offices in Asia Pacific have a succession plan in place, nine percentage points higher than the global average.

However, only a quarter of Asia Pacific families have a formally written succession plan compared with 42% globally.

The survey was conducted with 382 family offices worldwide, with 76 based in Asia Pacific.

Part of the Mark Allen Group.