Family offices are rotating out of cash and bonds, and are instead upping their investments in equities and real estate, according to research.
The study by fund management firm Somerset Capital, which surveyed 51 family offices – predominantly from Europe – earlier this year, found 48% planned to increase their allocation to equities in 2013. Half of respondents said they wanted to boost their investments in real estate, while 46% were looking to bolster their private equity allocations.
In stark contrast, 51.6% of those questioned – 76% of which were single family offices – said they wanted to reduce their holdings in bonds, with 43% planning to decrease their allocations to cash.
"The main message that comes out of our survey this year is that family offices are rotating out of cash and bonds in favor of equities (public and private) and real assets," said Somerset Capital in a statement.
Among the family offices questioned, the average current allocation to asset classes was 26% equity, 23% private equity, 15% bonds, 15% real assets, 13% cash, 6% hedge funds and 2% commodities. Half of those questioned managed assets in excess of $500 million (€385 million).
Almost all survey participants had holdings in private equity, with the family offices showing a strong preference for growth equity transactions (67%).
About four in 10 of the family offices questioned invested in hedge funds, with emerging/frontier market funds looking set to benefit the most this year.
“The survey bears out what we are hearing anecdotally – that family office investors do have cash to deploy and they are looking to increase their exposure to equity strategies, as well as global macro,” said the company.