Family offices increased their direct allocations to private companies and real estate last year to an average of 11 percent from 6 percent in 2009, according to BW, referencing the latest report by the Wharton Global Family Alliance. The drivers towards more direct investment include: declining fund returns and concerns about fees generated by outside managers, as well as concerns about conflicts of interest, says the BW report. The biggest changes that Wharton found since 2009 are listed here:
– Allotments to art collections and precious metals have increased fivefold, and now make up 5 percent of the portfolio on average in 2011.
– Average allocation to private equity funds fell to 9 percent from 11 percent two years earlier.
– The average portion in hedge funds stayed the same at about 12 percent.
– Allocations to funds of funds dropped to almost zero.