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How the richest people in the world are investing their money



The world’s super-rich are loving stocks — allocating 28% of
their average portfolio to the asset class, followed by private
equities and real estate.

The UBS and Campden Wealth annual report on family offices has
some important insights on where and how the ultrarich are
investing their money. Family offices are typically private
offices which manage the money of people with significant

The report was based on surveys of 311 family offices
globally, with an average of $1.1 billion under management.
About 40% of the family offices surveyed were located in
Europe, one-third in North America, and the rest in the
Asia-Pacific region and other parts of the world. 

Here is the breakdown on how and where they are investing their

  • Equities: Family offices are allocating 28%
    of their average portfolio to equity markets, up by 4.3
    percentage points over a year. They invested 22% of their
    equity portfolio in developed markets and 6% in
    developing markets. The move paid off with developed markets
    and developing markets and last year returning 23% and 38%
  • Private Equity: Private equity remains a
    stronghold in family-office portfolios — commanding a 22%
    share of the average portfolio, up 3.8 percentage points from
    2017. Family-office portfolios posted an average return
    of 18% in the private-equity space, up from 13% a year
  • Real Estate: It held its position as
    the third-largest asset class, at 17% of the
    average-portfolio allocation. At 23% of their average
    portfolio, family offices in Europe invested the most in real
    estate, followed by Asia-Pacific (18%) and North America
  • Hedge funds: Allocations
    to hedge funds fell for the third consecutive year
    , amid
    concerns of weak performance and relatively high fees. Hedge
    funds made up just 5.7% of the average family-office
    portfolio, a 3.2 percentage point drop from a year ago.
  • Bonds: The average family office
    dedicated 16% of its portfolio to bonds. They invested 24% of
    their bond portfolio in the emerging markets of South
    America, Africa, and the Middle East. 

The report noted how family offices operating across the
different parts of the world favor different asset classes:

  • North America invested more in
    developed-market equities (27%) and private-equity funds
  • Europe preferred alternatives (50%) and real
    estate (23%).
  • Asia-Pacific favored equities (28%), real
    estate (18%), and private equity (15%).
  • Emerging markets liked alternatives as
    a whole (37%), equities (25%), and bonds (24%). 
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