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Quote of the Week: Outperformance by Entrepreneurial SFOs

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October 25, 2012

 “An entrepreneurial mindset, as evidenced by Single Family Office incentive schemes, asset allocation and optimism about future performance, correlates with higher annual net returns.”

 

Who said it : the authors of a study entitled, Benchmarking the Single Family Office: Identifying the Performance Drivers, 2012 published this month

 

In Context: Wharton’s school of business has been making a tremendous effort to benchmark the successful practices and performance driving trends amongst the members of Wharton Global Family Alliance over the past three years. The quote was just one of the interesting findings that were included in a public summary of that analyzes the results of an extensive survey by Wharton and IESE completed in 2011. The SFOs were asked a wide range of questions and they provided quite detailed data for benchmarking (a breakdown of the size of those that participated is shown in the above image).

 

Other findings
– risk management capabilities are being enhanced as a result of lessons from the 2008 crisis.

 

– SFOs are putting more emphasis on managing the risk of their investments, which is evidenced by more diversified investment portfolios.

 

– Higher value placed on risk management as an SFO activity and increased use of a wider range of risk measures, including less traditional measures, especially among higher wealth, billionaire SFOs.

 

– Families are deeply concerned about potential vendor conflicts of interest. This has led to the internalization of activities that were in the past outsourced. They have also enhanced the process of manager selection and monitoring.

 

Where we found it: Wharton Global Family Alliance

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