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John Lee Ka-chiu, Hong Kong’s leader, set a target of having 200 large family offices set up in the city by 2025. Photo: Sam Tsang

Family offices in Asia-Pacific eye private equity, digital assets to offset losses in stocks and bonds, survey shows

  • Some 57 per cent of family offices in Asia-Pacific are looking to increase their exposure to private equity funds, survey shows
  • Almost half of those surveyed believe metaverse-related assets provide ‘promising investment opportunities’

Family offices in Asia plan to invest more in private equity and real estate to diversify their portfolios, according to a report released on Wednesday.

They are also increasingly investing in digital assets to offset losses from traditional investment vehicles.

Some 57 per cent of family offices in Asia-Pacific are looking to increase their exposure to private equity funds, and 39 per cent aim to invest directly in private equity, according to an annual report by Campden Wealth and Raffles Family Office.

The results are based on surveys of 382 family offices around the world, collected between March and June. The 76 offices surveyed in Asia-Pacific managed families with a combined net worth of US$94 billion, an average of US$1.2 billion each.

Family offices are companies set up by wealthy families or individuals to invest their riches, handle succession planning and conduct charity work.

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Inside Sheng Siong supermarket billionaire Lim Hock Leng’s home in Singapore

Inside Sheng Siong supermarket billionaire Lim Hock Leng’s home in Singapore

Asia-Pacific family offices are also finding new asset classes to invest in. Thirteen per cent have invested in non-fungible tokens (NFTs) while almost a quarter have put money in assets related to the metaverse.

Almost half believe metaverse-related assets provide “promising investment opportunities.”

“Asia-Pacific family offices are a lot more active in diversifying their portfolios,” said Kwan Chi-man, co-founder and group CEO of Raffles Family Office, which operates in Hong Kong and Singapore.

“Actually 46 per cent of them are looking to do so as compared to the global average of 34 per cent.

“Family offices are willing to invest in private equity, real estate and digital assets as these can bring higher returns than the traditional investments of stocks and bonds.”

This kind of diversification has helped 68 per cent of family offices in Asia-Pacific to report growth of their wealth during the past 12 months even amid a sharp fall of stocks and bonds this year, the study said.

In the first nine months of 2022, the global bonds market lost 20 per cent while the stock market plummeted by 27 per cent, according to the Bloomberg Global Aggregate Total Return Index and the MSCI All Country World Index respectively.

A separate survey by German start-up Moonfare, which has 13,000 users on its global digital private equity platform, found 83 per cent of its 244 individual investors plan to make new investment in private equity in the next 12 months.

“Our survey demonstrates that in times of great economic uncertainty investors recognise the benefits of private equity, with many even looking to extend their private markets exposure while seeking to build resilience into their portfolios,” said Moonfare Founder and CEO Steffen Pauls in a statement on Tuesday.

In his first policy address last month, John Lee Ka-chiu, Hong Kong’s leader, set a target of having 200 large family offices set up in the city by 2025.

Raffles’ Kwan said Hong Kong’s active private equity market and the government’s plan to develop the city as a digital asset hub make it an ideal place for family offices to operate.

The Hong Kong government announced on October 31 that it would introduce a wide range of measures, including a new licensing regime for digital assets services providers, to turn the city into a virtual-asset hub. Financial Secretary Paul Chan Mo-po last week reiterated this commitment, saying industry regulation is even more attractive to investors following cryptocurrency platform FTX’s collapse earlier this month.

“Hong Kong is going to build this on the basis of having a clear regulatory regime and we are very confident that things like FTX are unlikely to happen in Hong Kong,” Kwan said.

He said many wealthy families in Asia-Pacific are in the process of handing over to the next generation – one that is willing to take on new asset classes and pay more attention to the impact of investments on environmental, social and governance (ESG) issues.

“When the new generation take over the family wealth and become the captain of the boat, their priorities are different from their parents,” Kwan said. “They are a lot more socially aware of the ESG element and they also want to play an active role in that as well. As such, their investment mandate sometimes is adjusted accordingly.”

The major challenges facing family offices next year include geopolitical tensions such as the war between Russia and Ukraine, and concerns over high inflation and rising interest rates.

“We have seen some of the most aggressive interest rate hikes over the past few months, and that has caused a lot of turbulence in the stock market. That would be a major concern for most of the family offices,” said Kwan.

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