Skip to main content

2016 FOX Global Investment Survey Indicates Broad Engagement in Direct Investing by Family Offices

Sixty-nine percent (69%) of Study Participants say they Currently Engage in Direct Investing

According to a published article from the Family Office Exchange, more than two-thirds of family offices engaged in direct investing in 2015.

The finding was one of several key insights in the 2016 FOX Global Investment Survey from Family Office Exchange (FOX), a global membership organization of enterprise families and their key advisors. The study provides an in-depth look at the investment activity of leading single family offices, providing perspective on a range of topics including Economic Outlook and Investment Opportunities for 2016, Asset Allocation and Performance, Use of Investment Consultants and Investment Committees, Reliance on Alternative Investments, and Direct Investing.

According to the report, families with first- or second-generation leadership are much more likely to do direct investing than families with later-generation leadership, with 81% of Gen 1-2 families engaging in direct investing compared to 46% of Gen 3 and later. Growth capital is the most popular private equity deal stage (32%) followed by venture capital (30%).

“Investing directly in real estate properties or operating companies is familiar for many family offices that earned their wealth by building businesses,” says Charles B. Grace, III, managing director at Family Office Exchange. “In the face of volatility in the public markets, direct investments can seem a haven for those who want transparency and prefer taking risks with companies and/or properties they can investigate and perhaps control in some manner.”

Direct investors tend to be active investors, with forty percent (40%) preferring a lead role that gives them the transparency and control that they desire from their direct investments. When asked where they are finding new direct investing opportunities, 71% of direct investors said they rely on networking or their existing relationships/word of mouth. Proper evaluation of opportunities and deal pricing are the two biggest challenges facing direct investors looking to implement their strategy.

“Deal pricing has become a bigger challenge in executing a successful direct investment strategy as the market has become more efficient,” says Karen Clark, managing director at Family Office Exchange. “Evaluating opportunities is a bigger challenge for participants than finding deal flow.”

Additional key insights from the 2016 FOX Global Investment Survey include:


  • The median overall return for survey participants in 2015 was 2%, and expected 2016 return is 6%
  • Direct real estate and direct private equity enhanced returns in 2015, gaining 18% and 15% respectively
  • Seventy-eight percent (78%) of families are broadly diversified with a conservative growth orientation, including 20% to cash and fixed income, 43% to equities, 2% to hard assets, and 33% to alternatives


About Family Office Exchange
Family Office Exchange (FOX) is the premier global member network for enterprise families and their advisors who are pursuing best practices for managing their family enterprise and growing their family wealth. The community includes over 8,000 family leaders and sophisticated advisors from 500 organizations in 20 countries who utilize FOX’s resources each year for advice, networking, education, and best practices in wealth management.

FOX is headquartered in Chicago with offices in New York, Santa Barbara, Sydney, and London.
Labels:

Comments

Post a Comment

Popular posts from this blog

Harvard's Endowment commits to a target investment range into real estate between 10% to 17% for 2016

Years ago, before the downturn I was paying very close attention to the investing allocation of my Alma Maters Endowments Investing Strategy HMC (Harvard Management Company), especially in the area of real estate.  I believe that not only was Harvard a great place to understand the importance of investment allocation strategies before the downturn but even more so since the downturn. In fact, investors who are looking to enhance the performance of their investment portfolios probably won’t find a better investment model than the one used by the $37.6 billion endowment for Harvard University. The entity in charge of managing the endowment, Harvard Management Company (HMC), has accrued an impressive investment track record across its 41-year history. As of fiscal year 2015, the endowment had produced an average annual return of 12.2% – 290 basis points higher than the average 9.3% return of a typical U.S. 60/40 stock and bond portfolio. The methodology behind HMC’s success i...
1 comment
Read more

"Family Offices NEED to be aware of the impact Blockchain and Cryptocurrencies will have on Real Estate Investing" Here's Why:

·         Blockchain has the potential to revolutionize how the real estate sector operates. ·         It will lower transaction costs  ·         It will provide family office investors easier access to international listings ·         Because of cryptocurrencies there will be no need to deal with different banking systems ·         It will allow the process of purchasing or selling a piece of real estate to be more efficient and accurate ·         Its already happening HOWEVER FAMILY OFFICES SHOULD BE AWARE THAT ·         Some cryptocurrencies have gone under ·         There has been fraud associated with a few them ·     ...
Post a Comment
Read more

6 Things Family-Owned Real Estate Firms Should Know About Succession Planning

For the  family-run firms  in the real estate industry , a crucial concern centers around ensuring the longevity of the business they’ve spent years building and the assets they may have accrued. It usually means  the process  of prepping children to take over the business itself, as well as any assets in the firm’s portfolio.  NREI  consulted with attorneys specializing in succession planning for tips that family-run real estate businesses may want to keep in mind. About succession planning Among the chief goals of succession planning is providing continuity of management, in addition to minimizing the tax costs of transferring property interests to new generations, according to Bruce W. Tigani, attorney and chair of the tax, estates and business practice group at Morris James, a law firm based in Wilmington, Del. “Succession planning ensures the business has the capability of continuing profitability in case something happens to the owner or i...
Post a Comment
Read more