Last year, RBC Wealth Management partnered with Campden Wealth to create The North America Family Office Report 2021. Gathering insights from 179 family offices across Canada and the United States with a cumulative wealth of over US$269 billion, the report explores how family offices are allocating their capital across public and private market institutional strategies, how these allocations are evolving, and where they see the most attractive risk-adjusted growth opportunities.
Among the fastest-growing segment of institutional investors in North America, family offices have distinguished themselves as large, agile, highly sophisticated, and well-informed investors. Agility in adjusting portfolios to mitigate risk and seize more attractive opportunities results from a more centralized decision-making approach and their deep entrepreneurial roots. In making decisions, family offices can also typically call upon a mosaic of long-term investing experience, industrial operating expertise, and connections to decision-makers across many industries. This unique vantage point and decision-making edge typically translates into a higher appetite for risk and illiquidity premiums, as well as regular refinements of their strategic asset mix and early adoption of new strategies. Consequently, valuable insights can be gained from examining what these sophisticated investors see over the horizon.
Looking ahead, this report outlines that family offices are feeling constructive on the outlook for the global economy, with 86% believing that 2022 will reflect a year of economic growth. The strategic asset mix for family offices is dominated by equities and alternatives, and they anticipate shifting further into those asset classes. Allocations to alternatives in particular are growing, and a significant portion of the report is devoted to a deep dive into these allocations, examining their growth and performance. Finally, sustainability is a growing overlay theme for family offices throughout their allocations.
Key highlights
Wealth is growing across global family offices
86% of ultra-high-net-worth families saw their wealth increase from the previous year despite global challenges
Risk management is more important than ever
66% of family offices have increased their risk management strategy to mitigate risks such as rising interest rates and inflation
Succession planning is top of mind
51% of family offices report the next generation is not yet prepared for generational succession
For more information on this report, our work with family office clients, or how these findings apply to all manners of institutional investors, please reach out to your institutional portfolio manager, or to institutions@phn.com.