Asia-Pacific family offices look towards alternative investments, real estate, and equities amid inflationary backdrop

Portfolio diversification and alternative investments top investment priorities for next year;  APAC family offices ramp up interest in emerging technology

Key findings: 
"    88% of respondents cited inflation as the biggest risk to financial markets, closely followed by rising interest rates (72%) and geopolitical risk (58%).
"    54% of Asia-Pacific family offices are on the lookout for new investment opportunities, with 42% indicating a preference for alternative investments. 
"    Family offices engaged in sustainable investing dedicate, on average,  29% of their portfolios to sustainable investments but this is expected to increase to 50% over the next five years.
"    When considering new investment , green tech, digital transformation, and artificial intelligence are popular emerging technologies .
"    59% of families who have already invested in cryptocurrency continue to hold their allocation, with 25% actively wanting to increase their investment. 
"    70% of families in Asia-Pacific have a succession plan in place - higher than the global average, but 75% of these plans are only informally agreed upon, unwritten, or are in the process of development.

Singapore/Hong Kong, 30 November 2022 - A report launched by Raffles Family Office and Campden Wealth today found that family offices in the Asia-Pacific region are increasingly adopting strategies to mitigate the adverse impact of inflation, which was the most commonly cited risk for financial markets. "The Asia-Pacific Family Office Report", the Asia-Pacific edition of The Global Family Office Report: Regional Series, is based on statistical analysis of 382 surveys of family offices worldwide, with 76 (20%) in Asia-Pacific.

Mr. Chi-man Kwan, Group CEO and Co-Founder at Raffles Family Office, said: 
"As inflationary pressures persist in global markets, interest rates are being forced higher, with U.S. and European economies on the cusp of recession. This year's survey found that the majority (88%) of Asia-Pacific family offices identified inflation as the biggest threat to financial markets - a marked increase of 19% from 69% in our 2021 Asia-Pacific edition. Family offices have started to hedge against inflation, with slightly over half looking for investment opportunities for diversification, and a growing number interested in increasing their allocation in direct investments in private equity."

"We are delighted to continue our partnership with Campden Wealth in exploring the investment trends and themes that shape the family office landscape across Asia-Pacific. This year's edition continues to provide valuable insight on the changing preferences of some of the world's wealthiest families, in the face of economic uncertainty. As a leading multi-family office in Asia, these findings continue to shape our strategies and allow us to continue serving the needs of both ultra-high-net worth families and their family offices and bring them long-term value."

Changing strategies of Asia-Pacific family offices
88% of respondents cited inflation as the biggest risk to financial markets, closely followed by rising interest rates (72%) and geopolitical risk (58%). 42% of family offices are adopting a balanced investment strategy (up from 40% last year), while 30% are adopting a growth strategy (compared to 32% in last year). The remaining 28% adopt a wealth preservation-based strategy, a higher proportion than the global average (18%).

Diversification as a potential hedge against inflation
Mitigation strategies adopted include increasing exposure to real estate (52%), equities (50%), commodities (29%), and reducing the duration of bond portfolios (34%). Family offices look to these measures as a form of insulation from the challenging conditions present in the public markets.  

Despite challenging macroeconomic fundamentals, 54% of Asia-Pacific family offices remain on the lookout for new investment opportunities, particularly those that would add diversification to portfolios. 42% indicated a preference for alternative investments, highlighting the importance of diversification for these family offices.

Mr. William Chow, Group Deputy CEO, at Raffles Family Office, said: 
"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. 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."

Sustainable and tech investing on the rise, continued commitment to cryptocurrency
42% of family offices are now engaged in sustainable investing, with 29% of their portfolios dedicated to sustainable investments - an increase of four percentage points from last year, and two percentage points higher than the global average (27%). This is expected to increase to 50% over the next five years.

Family offices are expected to increase their investment in green tech (62% of family offices already invested), digital transformation (52%), artificial intelligence (44%), biotech (42%), and healthcare (38%). Despite crypto price declines, 59% of family offices who have invested in cryptocurrency continue to hold their allocation, with 25% actively wanting to increase their investment.

Succession planning still not clearly defined for most family offices in Asia-Pacific region   
70% of family offices in the Asia-Pacific region have a succession plan in place, nine percentage points higher than the global average (61%). However, three-quarters of these plans are relatively casual, being only informally agreed (18%) or unwritten (25%), or are in the process of development (32%). Asia-Pacific families (25%) significantly lag behind their global peers (42%) in formal written plans.

The presence of a patriarch or matriarch reluctant to relinquish control makes succession planning and discussion of sensitive matters problematic, according to a third of respondents. Other challenges include the younger generation being too young or inadequately qualified to take over. However, nearly a third of Asia-Pacific respondents expect to see Next Gens assume control over the coming decade.

Rebecca Gooch, Senior Director of Research, at Campden Wealth said:
"The research highlights the importance of clearly defined and enforceable plans for succession plans in the Asia-Pacific region. In a family environment, discussions of succession planning can be a sensitive issue, hence the prevalence of relatively casual plans. However, this can cause issues further down the line when succession has to take place, especially when Next Gens are going to assume control. Families can mitigate this by training family members, other internal staff, or engaging outside professionals to provide assistance."

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Download Information
The Asia Pacific Family Office Report 2022 is available for downloading from: https://www.campdenwealth.com/index.php/report/asia-pacific-family-office-report-2022

About Raffles Family Office
Raffles Family Office (RFO) is an award-winning commercial multi-family office with a full suite of investment management services for ultra-high net worth individuals. An integrated platform that combines independence with advisory expertise across a broad range of asset classes, and an expansive global partnership network built for seamless collaboration with the world's leading financial institutions, RFO is uniquely placed to offer comprehensive, lasting and highly bespoke wealth growth and preservation solutions. RFO is headquartered in Hong Kong and has branch offices in multiple Asian financial centres, including Singapore, Shanghai, Beijing and Taipei. For additional information, visit https://www.rafflesgroup.co     

About Campden Wealth
Campden Wealth is a family-owned, global membership organisation providing education, research and networking opportunities to families of significant wealth, supporting their critical decisions, helping to achieve enduring success for their enterprises and family offices, while safeguarding their family legacy.
Campden Research supplies market insight on key sector issues for its client community and their advisors and suppliers. Through in-depth studies and comprehensive methodologies, Campden Research provides unique proprietary data and analysis based on primary sources.

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