This makes it easier for family offices to step outside of their key focus area and further diversify their portfolios. Where family offices have built up significant sector expertise, there is a considerable opportunity to package this expertise into unique fund vehicles.įamily offices can then open their own funds so that others can invest in these. The Dentons report indicates that family offices seek deep expertise in external partners when investigating direct investments. Opportunity to partner in unique investment vehicles when stepping outside of a key focus area This allows the family to leverage vital competencies, experience, network, and more to help their direct investments during difficult times. The diversification of investments within this category is also vital to lower risk.ĭirect investment risk can be further reduced by identifying opportunities with strategic synergy with the family or the family office's core activities. When it comes to direct investment strategies, those formulating and executing these need to clearly understand the family office's financial return goals, risk tolerance, and how these investments will fit within the family's current portfolio. This extends into family offices' direct investment activities. Direct control and operational riskĭentons survey data reveals that many respondents struggle with operational risk and control. A Tactical Asset Allocation may also assist in adjusting longer-term allocations to minimize risk or benefit from short-term market movements. A Tilted Strategic Asset Allocation wherein the family tilts direct investments into a specific region or key competency to further reduce risk or optimize returns.
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