A recent survey by UBS indicates that family offices are planning significant changes to their investment portfolios, with 60% intending to adjust their allocations in the next year, a notable increase compared to the past five years. Many are reducing their U.S. investments and increasing exposure to emerging markets. North America is the only region where family offices plan to decrease allocations, while they are looking to invest more in Latin America and Africa.
John Mathews, UBS head of private wealth management for the Americas, noted that concerns have shifted from global trade tariffs to geopolitical tensions, global debt, and interest rates. The trend reflects a broader movement among family offices to diversify geographically due to various global crises.
The concept of "jurisdictional diversification" is gaining traction, with two-thirds of family offices holding assets in at least three jurisdictions. A significant number plan to decrease their U.S. dollar-denominated assets, with over a quarter indicating intentions to lower such holdings. The Swiss franc and euro are preferred for diversification.
Geopolitical uncertainty is cited as the primary risk for family offices in the coming year and the next five years, followed by concerns about a global trade war. Family offices are also looking to increase investments in emerging market equities, infrastructure, and gold, while slightly reducing cash and real estate holdings.
In contrast, U.S. family offices have increased their concentration in domestic assets, raising their share from 86% to 88% on average. Meanwhile, non-U.S. family offices are reallocating funds back to their home countries or other non-U.S. markets, with Chinese family offices investing half of their assets in Western Europe.
Mathews remarked on the divergence between U.S. family offices, which are maintaining their domestic focus, and their international counterparts, who are diversifying away from dollar-denominated securities.