Family offices posted average 12-month returns of 5.4 percent as of the first half of 2019 – a significant decrease compared to last year’s 15.5 percent, according to a study compiled by UBS and Campden Wealth.

More than half of the family office respondents expected a market downturn to kick off next year. Ninety percent of those surveyed in wider Asia pointed towards U.S.-China relations a major driver. Asia Pacific family offices slightly outpaced the global average, with returns of 6.2 percent. 

«Family offices are cautious about geopolitical tensions, and there is a widespread sense that we’re reaching the end of the current market cycle,» Dr. Rebecca Gooch, director of research at Campden Wealth, said. 

Succession Planning

Overall, family offices are increasingly focused on illiquid, long-term investments such as real estate and private equity. «While the average family office hasn’t made wholesale changes to its portfolio, many have been building up cash reserves and deleveraging their investments in anticipation of disruption ahead,» Gooch said.

According to UBS, families are starting their succession planning earlier, Sara Ferrari, the Swiss bank's head of family office said. «Succession often spans a series of complex matters involving business, investments and family relationships,» she said.

«Written plans are important, but they should be considered as part of a broader process of preparing the [next generation] to take control. The key is to start early.»