Apac family offices favour developed market equities, bonds: UBS report
[SINGAPORE] Family offices (FOs) in the Asia-Pacific favoured equities and bonds from developed markets in 2024 and plan to increase their strategic allocations into these asset classes in 2025, a report by UBS showed.
On average, an Apac FO allocated 24 per cent to equities and 20 per cent to bonds from developed markets in 2024, according to UBS' Global Family Office Report 2025.
South-east Asian FOs – which are ones that book their assets in that region – allocated 27 per cent to equities and 22 per cent to bonds from developed markets in the year.
The interest in bonds is in line with investors moving away from cash, as interest rates fall, said LH Koh, head of global family and institutional wealth Apac at UBS, at a media roundtable on Thursday (May 22).
Cash holdings remained high in previous years due to the high interest rate environment.
But with yields on deposits on a decline, investors are now deploying their cash into products with similar risk profiles, such as in high-quality, investment-grade, developed market bonds, Koh said.
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For 2025, Apac FOs are planning to increase their holdings in developed market bonds to 17 per cent, from a range of 11 to 16 per cent from 2019 to 2024.
They also plan to increase their allocation in developed market equities to 29 per cent, compared to the range of 23 to 26 per cent from 2019 to 2024.
In terms of asset allocation over the next five years, 48 per cent of Apac FOs are looking to increase investments in developed market equities, while 40 per cent of them are looking to raise their stakes in emerging market equities.
Furthermore, Koh noted that gold has drawn interest in the recent 12 months.
While gold is not a significant allocation as a whole, there is still structural demand ahead.
'The clients that are buying gold may not buy a lot of gold, but more and more clients are buying gold,' he said.
More interest in Apac
Apac is where most FOs plan to increase their investments.
Some 55 per cent of Apac FOs are looking to raise their asset allocation in the Apac excluding Greater China, while 30 per cent are eyeing Greater China.
Koh noted that the Chinese markets remain challenging. He said: 'But if you look at the delta that the China market offers, I think it's looking much better.'
Koh expects a key challenge for China will be international consumption, especially as the export market will likely be hit by the trade war with the US.
But he noted that the Chinese government has been very focused on boosting domestic consumption, which gives assurance and comfort to private enterprises. It has also made moves to improve its real estate sector.
Koh said companies in the generative artificial intelligence, renewable energy and healthcare space sees most interest in China.
Another market of interest in the region is India, supported by its secular trend and the prospect of above average growth.
Meanwhile, the report also noted that succession planning is a big topic for many Apac FOs.
Close to six in ten of Apac FOs will involve their next generation on their boards.
Some 49 per cent of Apac FOs will involve their next generation in management or executive roles in the FOs, higher than that of their global peers, which came in at 31 per cent.
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