�۶���Ƶ

“Diversification is the only free lunch in investing”—this insight, attributed to Harry M. Markowitz, the father of modern portfolio theory, sums it up: Broad diversification is probably the best way to reduce portfolio risk without having to forgo return opportunities. Especially in today’s market environment, this lesson should be taken to heart.

Our latest Global Family Office Report provides insight into the actual state of diversification in investment portfolios. The responses of over 300 participants from nearly every continent offer fascinating insights and interesting conclusions. In addition to detailed information on asset allocation, the report also provides an overview of how family offices assess key topics such as risk appetite, professionalization and governance, costs, personnel structure, and succession planning.

With regard to geographic diversification, it is not surprising that a pronounced “home bias” shapes allocations in developed markets. This is particularly notable in the US, where family offices on average hold 86% of their investments in North America. In Switzerland and Europe, the share of domestic investments is 54% and 47%, respectively. Family offices in Latin America or the Middle East act quite differently: There, only about one-eighth of investments are made in their own region, while the majority—mainly due to more stable conditions—is invested in North America and Europe.

Unsurprisingly, (geo)political risks are the main reason why investment decision-makers are considering adjustments to geographic allocation. Following recent turbulence in currency markets, questions about currency allocation have also come into sharper focus. Volatile US trade policy, concerns over the independence of the Federal Reserve, and increasingly undisciplined fiscal policy have recently put pressure on the US dollar. We therefore favor using periods of dollar strength to consider (partial) hedging of dollar-denominated assets.

Looking at asset allocation by asset class, it is striking that family offices hold a significantly higher proportion in alternative investments than private investors. In Switzerland, this share is around 44%, with private equity accounting for 16%—the largest portion—followed by real estate (12%), as well as hedge funds, art and antiques, private credit, gold, other commodities, and infrastructure investments. Even though many of these assets are not publicly traded and are therefore less liquid, we believe they are attractive due to their return potential and beneficial diversification properties—and are an important building block in portfolios for long-term oriented investors.

Please read the legal applicable to this publication.