Family office approach
Family office approach
Podcast
2.1.2024
2022 was a year full of challenges: Global conflicts, volatile markets and drastic inflation, including interest rate hikes, presented investors with far-reaching difficulties. Despite all this, family offices in particular were able to steer their managed wealth through these upheavals with an above-average degree of stability.
So what is the secret of their success? And what conclusions can you as an investor draw for yourself?
In cooperation with HSBC Global Private Banking, Campden Wealth Limited's annual Family Office Report sheds light on the investment strategies and decisions of family offices as well as their internal structures. Over the past year, a detailed report has been produced that reveals how safe navigation through adverse circumstances was possible in 2022 - and will continue to be possible in the future.
Conducted between April and September 2023, the survey comprises 330 responses from single and multi-family offices worldwide. This includes 102 participants from Europe, on whose statements the analysis in the European edition focuses. Together, they manage total assets of USD 91 trillion AUM (assets under management) and are therefore among the elite of investment experts.
In summary, more than half of respondents reported an increase in their assets, which 16% even described as significant. Only 10% noted a reduction in the 2022 observation period.
If we look at the statistics on the performance of the allocated portfolios, only 24% of participants underperformed their respective benchmarks. This compares with 40% who were able to outperform through their asset allocation.
The survey reveals that family offices have proven to be resilient despite a complicated economic situation and have repeatedly demonstrated a high degree of adaptability. But why is that?
According to Campden's data, in addition to their high level of expertise, it is above all their proactive approach to portfolio management. This was confirmed by a large majority of 80%. This means that instead of relying on one-off strategies, family offices across Europe focus on continuously updating the respective positioning of the assets under management. A fact that can be measured by the returns achieved, especially in comparison to the broad average of investors.
Liquid asset classes in particular suffered significant slumps in 2022. The reasons for this were not so much the final effects of the pandemic, but rather the war in Ukraine and the abrupt rise in inflation. The latter in particular had dramatic consequences: while central banks attempted to counteract the loss of purchase prices with a restrictive monetary policy, it was precisely the rising interest rates that subsequently restricted economic growth. As a result, both equity and bond investments recorded heavy losses. The global equity and bond markets both recorded declines of 13% in euros in 2022. So how did family offices manage to counteract this?
FINVIA also significantly outperformed the benchmark in the area of asset management . The reason for this is the constant adaptation of our investment strategy to current market developments - in 2022 as well as today. Notable changes here related in particular to the following factors:
The example of our own decisions not only illustrates the importance of flexibility and dynamic wealth management, it also fits seamlessly into the environment presented by the Family Office Report. For example, 44% of respondents saw inflation as the biggest risk factor, while 31% feared a recession in the US economy.
Accordingly, targeted diversification was the number one strategy pursued, followed by hedging against inflation risks and overweighting alternative asset classes. alternative asset classes. The latter in particular was the decisive factor for the above-average performance of family offices compared to other investors. While equities and bonds fell well into negative percentage territory, the private investment market did not experience such a slump. Portfolios here were therefore more stable and robust. The wealth portfolios managed by FINVIA showed similar behavior - exactly as anticipated by our investment team.
As previously noted, the greatest strength of family offices lies in their proactive approach on the one hand and their high level of expertise on the other. It is therefore no surprise that 85% of participants have installed an investment committee in their investment processes.
This body is also a decisive factor at FINVIA when it comes to planning the financial strategy, examining all investment opportunities for our clients and monitoring market developments. Consisting of specialists from various investment areas, it brings together all the expertise and forms the basis for all decisions. In this way, it ensures a high standard of quality for our clients in all areas.
One surprising detail is that only 38% of respondents stated that they use digital platforms to consolidate their portfolios. However, the report also notes a growing interest in this area.
This clearly shows how wide the gap is between family offices. While traditional companies have held on to tried-and-tested structures, others have long since replaced them. FINVIA, for example, was already pursuing the approach of combining the best of both worlds in 2019 - while market participants largely ignored these opportunities.
Campden's data shows: The most important factors for successful investment are flexibility, timeliness and expertise. Those who keep an eye on market developments and are prepared to continuously develop and adapt are able to master even the most difficult challenges.
These aspects are also invaluable to us as a family office. While we are proud of our role as digital pioneers, we are equally pleased to regularly scrutinize ourselves and compare ourselves with others as part of a unique corporate culture. Whether in terms of investment committees, continuous strategy adjustments or new technical solutions - for us, the most important factor in what we do remains its quality. And we will continue to take all the necessary steps to achieve this in the coming year 2024.
Source: This article refers to the document "The European Family Office Report 2023" by Campden Wealth Limited in partnership with HSBC Global Private Banking, as of 26.12.2023.
You can download the document here.
Family office approach
2.1.2024
Christian Neuhaus
In 2023, Campden conducted a survey among family offices in cooperation with HSBC to shed light on how they dealt with the challenges of 2022. The result: family offices demonstrated resilience even in times of crisis. So what is their secret? Looking at the data, we put ourselves to the test and explain what investors can learn from the results.
2022 was a year full of challenges: Global conflicts, volatile markets and drastic inflation, including interest rate hikes, presented investors with far-reaching difficulties. Despite all this, family offices in particular were able to steer their managed wealth through these upheavals with an above-average degree of stability.
So what is the secret of their success? And what conclusions can you as an investor draw for yourself?
In cooperation with HSBC Global Private Banking, Campden Wealth Limited's annual Family Office Report sheds light on the investment strategies and decisions of family offices as well as their internal structures. Over the past year, a detailed report has been produced that reveals how safe navigation through adverse circumstances was possible in 2022 - and will continue to be possible in the future.
Conducted between April and September 2023, the survey comprises 330 responses from single and multi-family offices worldwide. This includes 102 participants from Europe, on whose statements the analysis in the European edition focuses. Together, they manage total assets of USD 91 trillion AUM (assets under management) and are therefore among the elite of investment experts.
In summary, more than half of respondents reported an increase in their assets, which 16% even described as significant. Only 10% noted a reduction in the 2022 observation period.
If we look at the statistics on the performance of the allocated portfolios, only 24% of participants underperformed their respective benchmarks. This compares with 40% who were able to outperform through their asset allocation.
The survey reveals that family offices have proven to be resilient despite a complicated economic situation and have repeatedly demonstrated a high degree of adaptability. But why is that?
According to Campden's data, in addition to their high level of expertise, it is above all their proactive approach to portfolio management. This was confirmed by a large majority of 80%. This means that instead of relying on one-off strategies, family offices across Europe focus on continuously updating the respective positioning of the assets under management. A fact that can be measured by the returns achieved, especially in comparison to the broad average of investors.
Liquid asset classes in particular suffered significant slumps in 2022. The reasons for this were not so much the final effects of the pandemic, but rather the war in Ukraine and the abrupt rise in inflation. The latter in particular had dramatic consequences: while central banks attempted to counteract the loss of purchase prices with a restrictive monetary policy, it was precisely the rising interest rates that subsequently restricted economic growth. As a result, both equity and bond investments recorded heavy losses. The global equity and bond markets both recorded declines of 13% in euros in 2022. So how did family offices manage to counteract this?
FINVIA also significantly outperformed the benchmark in the area of asset management . The reason for this is the constant adaptation of our investment strategy to current market developments - in 2022 as well as today. Notable changes here related in particular to the following factors:
The example of our own decisions not only illustrates the importance of flexibility and dynamic wealth management, it also fits seamlessly into the environment presented by the Family Office Report. For example, 44% of respondents saw inflation as the biggest risk factor, while 31% feared a recession in the US economy.
Accordingly, targeted diversification was the number one strategy pursued, followed by hedging against inflation risks and overweighting alternative asset classes. alternative asset classes. The latter in particular was the decisive factor for the above-average performance of family offices compared to other investors. While equities and bonds fell well into negative percentage territory, the private investment market did not experience such a slump. Portfolios here were therefore more stable and robust. The wealth portfolios managed by FINVIA showed similar behavior - exactly as anticipated by our investment team.
As previously noted, the greatest strength of family offices lies in their proactive approach on the one hand and their high level of expertise on the other. It is therefore no surprise that 85% of participants have installed an investment committee in their investment processes.
This body is also a decisive factor at FINVIA when it comes to planning the financial strategy, examining all investment opportunities for our clients and monitoring market developments. Consisting of specialists from various investment areas, it brings together all the expertise and forms the basis for all decisions. In this way, it ensures a high standard of quality for our clients in all areas.
One surprising detail is that only 38% of respondents stated that they use digital platforms to consolidate their portfolios. However, the report also notes a growing interest in this area.
This clearly shows how wide the gap is between family offices. While traditional companies have held on to tried-and-tested structures, others have long since replaced them. FINVIA, for example, was already pursuing the approach of combining the best of both worlds in 2019 - while market participants largely ignored these opportunities.
Campden's data shows: The most important factors for successful investment are flexibility, timeliness and expertise. Those who keep an eye on market developments and are prepared to continuously develop and adapt are able to master even the most difficult challenges.
These aspects are also invaluable to us as a family office. While we are proud of our role as digital pioneers, we are equally pleased to regularly scrutinize ourselves and compare ourselves with others as part of a unique corporate culture. Whether in terms of investment committees, continuous strategy adjustments or new technical solutions - for us, the most important factor in what we do remains its quality. And we will continue to take all the necessary steps to achieve this in the coming year 2024.
Source: This article refers to the document "The European Family Office Report 2023" by Campden Wealth Limited in partnership with HSBC Global Private Banking, as of 26.12.2023.
You can download the document here.
About the author
Christian Neuhaus
Christian Neuhaus is one of the founders of FINVIA.
After gaining his first professional experience at UBS Sauerborn, where he was a member of the investment committee, the business graduate joined HQ Trust GmbH, the multi-family office of the Harald Quandt family, in 2011 together with some of the current FINVIA founders. Here, he advised complex large assets on asset structuring until 2016. He was then involved in setting up the digital asset manager LIQID - an associated company of HQ Trust GmbH, to which he eventually returned to help develop the digital strategy.
