Singapore family offices beat their global peers

In Singapore, family offices - like small private banks for rich families - outperformed their global and regional peers last year, mainly due to private equity investments.

According to the latest Global Family Office Report by Campden Wealth Research and Swiss private bank UBS, Singapore family offices made average returns of 6.9 per cent last year in US dollar terms, beating the 6.1 per cent global average returns, and the 6.3 per cent average seen across the Asia-Pacific.

This is because, on average, Singapore family offices tend to place more of their portfolio in private equity, which performed very well last year, and less into equities and real estate, both of which did poorly, the report said.

For example, 31 per cent of the average Singapore-based family office portfolio was placed in private equity investments last year, compared with 28 per cent across the Asia-Pacific.

The average Singapore family office placed 20 per cent of its portfolio in equities, well below the 26 per cent average across the region.

A family office is, in its simplest form, the private office for a family with significant wealth. The purpose of an office can range from handling key family assets and core holdings to more sophisticated wealth management structures.

The returns of 6.3 per cent enjoyed by Asia-Pacific family offices last year came a close second to Europe's 6.4 per cent returns.

North American family offices had returns of 5.8 per cent, while family offices in emerging markets saw returns of 4.9 per cent.

Overall, global family offices made a return of 6.1 per cent over the year, lower than the 8.5 per cent returns they enjoyed in 2013.

"While there have been adjustments to allocations into more risky assets, this did not materially impact the overall performance. Instead, the lower growth reflects disappointments in asset categories, notably in the single most important category of equities," the report said.

Ultimately, however, the report found that ultra-wealthy families still have the same objectives in mind when setting up and running their family offices - that is, ensuring that the offices help to manage their wealth across generations.

As Asian billionaire families grow in size and complexity, succession planning becomes increasingly important in creating a lasting family legacy, said Mr Joseph Poon, UBS Wealth Management's head of ultra-high net worth in South-east Asia.

He said: "In the Asia-Pacific, many entrepreneurial families play a key role in contributing to the region's growing share of global wealth.

" Although the family office model is still in its infancy in this region, UBS continues to see increasing client interest in topics such as family business continuity, family decision-making, wealth structuring, philanthropy, and the setting up of family office structures."

A version of this article appeared in the print edition of The Straits Times on October 16, 2015, with the headline 'Singapore family offices beat their global peers'. Print Edition | Subscribe