What 4 things are keeping family office managers up at night?

New BlackRock report reveals how the pandemic has informed portfolios and the key objectives for 2021

What 4 things are keeping family office managers up at night?
Steve Randall

The markets have generally performed well in the face of the challenges of the past year, but how have the world’s richest families fared?

Those that manage their huge wealth through family offices report strong resilience according to a survey of global family offices by BlackRock and Juniper Place.

Less than one quarter of respondents said that they were anticipating making material changes to their portfolios, although those in North America are less likely to say this.

There are four key elements keeping family offices up at night:

  1. Portfolio diversification
  2. Liquidity management
  3. Global equity market valuations
  4. Inflation

What’s the plan?
Overall sentiment is cautious to marginally negative and new challenges have emerged though, prompting a stronger emphasis on geographical and asset class diversification to tap growth markets outside their core focus.

There is also a feeling that family offices need to be more opportunistic in the months ahead and there is a strong intention to focus on alternative asset classes, particularly private debt, hedge funds, and real estate.

Ensuring cash flow is a concern for some and ties in to the desire to tap opportunities as they arise, especially with an expectation of volatility.

The family office executives are concerned about the impact of central bank intervention on global equity market valuations and question the sustainability of the performance of some corporates.

Finally, the risk of inflation is necessitating an eye of inflation-hedging assets such as gold and real estate.

A recent report from JPMorgan suggests that family offices are also interested in cryptocurrencies, which are currently enjoying a boom.

The full BlackRock report is available at https://www.blackrock.com/institutions/en-gb/insights/investment-actions/global-family-office-survey