Three-Fourths of Family Offices Are Embracing AI
More than three-fourths of investment firms catering to ultra-high-net-worth investors are turning away from traditional investments in favor of emerging opportunities in artificial intelligence (AI).
That's according to UBS’s Global Family Office report, which is based on surveys of more than 300 single-family offices (FOs) doing business in seven regions of the world. Firms surveyed represent investors with an average net worth of $2.6 billion in assets.
And while the family offices surveyed identified many of the usual suspects in their asset allocations, with 28 percent allocated towards (mostly U.S.) equities, 16 percent in fixed income and 22 percent in private equity, other percentages signal changes in how FOs view current opportunities:
Globally, FOs' investments in real estate were down to 10 percent, due to shaky valuations.
More than half of survey respondents say they now support impact investing
78 percent of family offices are investing in generative AI opportunities
That last point doesn’t come as a surprise to the report’s authors. UBS determined that artificial intelligence “is the most popular investment theme” among FOs worldwide, and the financial services giant predicted AI will remain a predominant investment theme for FOs for at least the next two to three years.
In addition to aggressively embracing AI and impact initiatives, other investment patterns among surveyed FOs show a preference for healthtech (70%), automation and robotics (67%), medical devices (59%), and security and safety (52 %).
However, UBS adds that regional differences shape those preferences. For instance, 83 percent of U.S.-based FOs say they are likely to invest in AI, while 76 percent of family offices in Switzerland are likely to invest in health tech.
Impact Investing Becoming ‘Increasingly Important’
But cutting-edge tech has not been the only thing that has captured the attention of FO decision makers. UBS’ report also confirms a greater focus on impact investing.
“It appears that sustainability is becoming an increasingly important topic affecting not just family offices’ investment portfolios, but also the long-term outlook for operating businesses,” says UBS.
Fifty-seven percent of family offices surveyed are “either taking sustainability considerations into account for their operating businesses or plan to do so in the future,” says UBS. And nearly half (49%) of those FOs say they are seeking to strike a balance between “addressing the net zero transition and reducing emissions” as key considerations during the next three years.
The reason these FOs are now embracing impact investing?
“Several family offices with large real estate holdings indicate that sustainability has become critical for them,” according to the report. “Among those family offices incorporating sustainability and/or impact considerations, 47 percent say it is important to manage financial and non-financial risks for both their investment portfolios and business operations.”
Avestix’s Take on Family Office Investment Trends:
What can we learn from the family office investment trends uncovered by UBS?
Namely, that family offices continue to operate ahead of the curve in supporting new tech and impact investing.
As Avestix found when compiling its The State of Play for Family Offices eBook, 78 percent of family offices now invest in AI-related opportunities and about 40 percent of FOs “are actively investing in cryptocurrencies or exploring doing so.
Our research also found that — as far back as 2022 — family offices were making impact investing a priority.
Want to know more? You can download UBS’ family office study here. We also invite you to download a complimentary copy of Avestix’s eBook, The State of Play for Family Offices.
All investments involve risk and some investments and investment sectors discussed may not be suitable for all investors. Please consult your financial advisor before making any investment decisions.