How wealthy families seek returns
The degree to which family offices are willing to take risks is also influenced by the age of their investments. Family portfolios have recently undergone some changes.
In the previous year, investors had to be skillful to achieve positive returns. Apart from a few outliers like the Brazilian Bovespa, stock indices and government bonds ended the year on a downward trend. With the recent rise in interest rates, the previous upward trend in real estate prices has stalled in several locations. These developments have caused significant changes in the portfolios of family offices, which tend to maintain a low profile.
Liquidating real estate
While family offices’ investment approaches are typically kept confidential, recent investment trends have been observed, according to our Managing Partner (CEO) Berthold Baurek-Karlic, who spoke to the Austrian Newspaper “Die Presse“. “I have witnessed the most rapid divestment from real estate in my entire career. The scale and swiftness of the reduction were astounding”, said our CEO.
Over the past few months, Europe’s family offices have been re-allocating their portfolios in a manner that would be unsuitable for investors seeking rapid returns. “The investors we collaborate with are highly resilient”, notes family office specialist Frank Floessel in an interview with “Die Presse”. “The same goes for investments in venture capital or private equity. These asset classes have lower liquidity and exiting them in the short term often incurs significant discounts.”
Investors with Long-term Perspective
Family offices, however, frequently possess the luxury and fortitude to maintain investments for decades. This is why they are instrumental in supporting investors in nascent businesses, where it is uncertain when and how much profits will be earned. Industries reliant on research, in particular, demand long-term commitment.
Our CEO Baurek-Karlic explains: “We are overseeing a space company that would not have been possible without the support of the public sector and family offices. They may have considerable resources, but at the end of the day, the technological undertaking must be feasible, financially viable, and sustainable.”
Baurek-Karlic and Floessel refrain from mentioning the entrepreneurial families that they advise on asset management. However, the experts stress that various offices have diverse investment strategies. While some prioritize philanthropy, others distance themselves from charitable contributions and patronage.
“There are families that wholeheartedly embrace venture investments, while others adopt a highly conservative investment approach. My differentiating factor there is primarily the age of the wealth,” explains Floessel. “The older the wealth, the greater the probability of a more distant relationship with it.”
You can find the full article (published in German) here.