Originally published on May 24, 2013
I was the moderator of the opening multi-asset panel last week in the Family Office Leadership Summit in Singapore. The panel derived its strength from the fact that my fellow-panelists came from different backgrounds, including a hedge-fund manager, a private-wealth manager
from India, an Asian family-office manager, and an advisor to European clients on Asian funds.
The panel started with a discussion on investing in these times of low interest rates and high liquidity. The panelists spotted the search for investment opportunities extending into a range of asset-backed securities, alternative assets (including Australian forestry), real assets (Asian property), high-dividend equity and private equity. Given their disappointing performance in the recent years, hedge funds were not in favor.
When it comes to investing, private-wealth investors enjoy a few advantages: they can afford to have a longer-term outlook, accept a reasonably high level of illiquidity, and ignore the volatility in the meantime. That approach gives them the freedom to look at a wider range of investment options. One panelist pointed out that family offices have the opportunity to play in an intermediate size range: between USD 50m and USD 150m - too big for individual investors, but too small for public deals.
On selecting managers, the panel pointed to the team and strategy as the key areas to consider. But communication between the family offices and the fund managers was highlighted as a potential problem area. Not only are managers unable to explain their strategies in simple terms, but family office investors also do not have adequate inhouse professional talent to understand what the managers are trying to do.
The extent of home bias among private-wealth investors seemed to vary. European investors are actively seeking to diversify outside their home territory. On the other hand, Indian investors seem to find greater value in their home market, diversifying into properties in India, US, London and Singaporeas the next choice, but limited in their investments in global financial markets.
Overall, private-wealth investors are navigating the current investment realities well, thanks to their superior ability to diversify across asset classes.
from India, an Asian family-office manager, and an advisor to European clients on Asian funds.
The panel started with a discussion on investing in these times of low interest rates and high liquidity. The panelists spotted the search for investment opportunities extending into a range of asset-backed securities, alternative assets (including Australian forestry), real assets (Asian property), high-dividend equity and private equity. Given their disappointing performance in the recent years, hedge funds were not in favor.
When it comes to investing, private-wealth investors enjoy a few advantages: they can afford to have a longer-term outlook, accept a reasonably high level of illiquidity, and ignore the volatility in the meantime. That approach gives them the freedom to look at a wider range of investment options. One panelist pointed out that family offices have the opportunity to play in an intermediate size range: between USD 50m and USD 150m - too big for individual investors, but too small for public deals.
On selecting managers, the panel pointed to the team and strategy as the key areas to consider. But communication between the family offices and the fund managers was highlighted as a potential problem area. Not only are managers unable to explain their strategies in simple terms, but family office investors also do not have adequate inhouse professional talent to understand what the managers are trying to do.
The extent of home bias among private-wealth investors seemed to vary. European investors are actively seeking to diversify outside their home territory. On the other hand, Indian investors seem to find greater value in their home market, diversifying into properties in India, US, London and Singaporeas the next choice, but limited in their investments in global financial markets.
Overall, private-wealth investors are navigating the current investment realities well, thanks to their superior ability to diversify across asset classes.
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