Asia's family offices trim equities to outperform Europe and Middle East
Family offices in Asia have been doing better at paring back investment losses year-to-date compared with their counterparts in Europe and the Middle East, a new survey shows.
Year-to-date, single family offices in Asia have recorded a 6.7% loss on investments. This compares with losses of 8.1% and 11.8% respectively for Europe and Middle East, according to Credit Suisse’s new Single Family Office Index launched on Monday (September 26).
Globally, single family offices recorded a 7.6% loss as of July 29, the SFO Index showed.
“One of the reasons why Asia [family offices] have been outperforming in 2022 is that the period was quite a difficult time for listed equities. They have less exposure to the asset class,” according to Nannette Hechler-Fayd’herbe, Credit Suisse’s head of global economics and research.
The index showed that year-to-date, equities were the worst performing asset class in family offices' portfolios globally with 6.5% losses. The survey did not provide a breakdown of allocation of SFOs from different regions.
This is followed by fixed income, which lost 1.6%. Across asset classes, only alternative investment and commodities portfolios brought 0.57% and 0.1% gains for family offices.
Analysts say the strategy of family offices in Asia has been to expand exposure to the private market while at the same time cutting listed equities investment.
Most recently, Alibaba co-founder Joe Tsai’s family office, the Hong Kong-based Blue Pool Capital, has sold off shares in over 30 US-listed companies since the beginning of 2022, including Alphabet, Microsoft and Twitter, in order to allocate more assets into the private markets, especially start-ups.
FEWER HOME BIASES
Credit Suisse’s index tracked the bankable assets of 312 single family offices from data collected from custodians from 2020 to July 29, 2022, excluding direct private equity and real estate exposure which was managed separately and not held in custody.
The survey found that over the period, family offices from Asia, Europe and the Middle East had similar performances until October 2020, when European family offices started outperforming up until the fourth quarter of 2021.
“What I think is remarkable is how close the performances are across regions. So, for anyone that was anticipating very large home biases in certain regions, this didn't seem to be so much the case over the period,” Hechler-Fayd’herbe said.
It showed that SFOs tended to be globally invested, leading to similar performances across different regions, she added.
She also noted that as performances were shown in US dollar terms, exchange rate effects may have led to different return comparisons when expressed in local currencies or other reference currencies.