family office

How Family Offices Handle Economic Uncertainty

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January 24, 2012

A new survey from Cambridge Associates says that family offices revealed that few families made few strategic changes in response to the 2008 meltdown and subsequent volatility. The firms that oversee assets for ultra-high net worth made “tactical adjustments” but few strategic changes in recent years, which reflects their long term horizon and satisfaction with current management practices, according to the report.

 

The median asset size of the family offices in the survey was USD534 million, and participants represented a mix of Cambridge Associates clients and other family offices that work independently or with other advisors.

Tactical Steps Undertaken

– 62% increased liquidity and cash reserves. (Cash positions rose to 9.6% from 7.5% pre-2008.)

– 49% rebalanced portfolios.

– 43% actively reduced portfolio risk.

– 41% conducted more projections of cash flow and capital calls.

With greater liquidity and cash reserves, family offices will likely take advantage of future market opportunities, such as European distressed debt. When it comes down to it, the most common response to questions about changes to family office oversight and management policies in the post-2008 period was that none was made,” said Douglas Macauley, managing director at Cambridge Associates.

 

He added that it interesting to see the long-term horizon, and he confirmed that UHNW families appeared to have the resources to “ride out difficult market environments” and, for the most part, did not initiate changes in their investment policies in reaction to the crisis. (Image Source: Cambridge Associates – London location)

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