Singapore family offices get boost from market rally

The financial market rally last year boosted returns at private investment firms set up here to serve wealthy families.

Family offices, as they are called, recorded an average return of 6.6 per cent here last year, compared with 1.2 per cent in 2015, according to Swiss private bank UBS and Campden Wealth Research. The performance of the Singapore offices was close to the Asia-Pacific average rise of 6.7 per cent for the 2016 calendar year.

UBS and Campden Wealth surveyed 262 family offices globally between February and May, with 11 from Singapore and 42 across the Asia-Pacific. The average value of assets under management at Singapore family offices was US$857 million (S$1.2 billion) for 2016, almost double the regional average of US$445 million.

Mr Eric Landolt, Asia-Pacific head of family advisory at UBS Wealth Management, told a briefing yesterday that Singapore's "significant rebound in performance" was owing to higher allocations in equities and private equity. "They've shifted towards illiquidity, and potentially higher risk for higher returns," he noted.

Equities are the largest asset class in the average family office portfolio in Singapore, with an allocation of 22.1 per cent.

Mr Anurag Mahesh, UBS Wealth Management's head of global family office for Asia-Pacific, said Asia-Pacific family offices tend to have higher allocations of private equity. This can be made up of direct investing, including venture capital investments, co-investments and private equity funds.

Asia-Pacific family offices allocate 20.9 per cent to private equity on average, while those in Singapore allocate 19.3 per cent. He said: "One of the trends we noticed is that family offices are looking to increase their allocation into co-investing. So not necessarily in private equity funds, but alongside in specific transactions... They do find it difficult because they don't have enough talent in terms of doing due diligence."

The report, now in its fourth year, noted that real estate is the second-largest asset class in the average Singapore family office portfolio, making up about 20.4 per cent, compared with Asia-Pacific portfolios' 20.3 per cent .And 67 per cent of family offices here are working on succession plans, compared with only 29 per cent of those in Hong Kong.

Some Singapore family offices (33 per cent) also expect the next generation to take "hands-on control", and another 33 per cent said the family "will establish or join a multi-family office".

A version of this article appeared in the print edition of The Straits Times on September 21, 2017, with the headline 'S'pore family offices get boost from market rally'. Subscribe