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

CRE Distress is Still Out There................Lingering

Capital Scarcity Persists T here remains scheduled maturities in excess of $300 billion for each of the four years, 2014 through 2017. Most of this debt was underwritten during the peak of the last cycle from 2004 to 2007, when valuations were high and loan underwriting standards were loose, amortization disappeared and interest-only payment terms took its place. The majority of these loans are either under water (the loan is in excess of today's value of the property) or un-refinanceable, given today's lower asset valuations and more restrictive debt covenants. Additionally, a huge portion of the debt that matured during the 2009-2012 timeframe (per the graph below, in excess of $300 billion per year) has not yet been resolved.   Maturities Catalyze opportunity It has been "extended and pretended" and still awaits recapitalization and resolution. In other words,   the majority of the problem in CRE is still to be solved and the majority of the distre...
Post a Comment
Read more

Buffett’s Three-Step Rule of Focus for Success

To set you on the right course, take a coaching lesson from Buffett himself. He once walked his personal pilot through a life-changing exercise in goal-setting that's since become popular in productivity and career circles. It's a simple, three-step process to set boundaries, say no to distractions, and home in on success. It goes like this: 1. Write down a list of your top 25 career goals. 2. Circle the five most important goals that truly speak to you. These are your most urgent goals. Now here's the real kicker. 3. Completely eliminate the other 20 goals you have listed. Just cross them off, despite if they ...
Post a Comment
Read more