Finews, a Swiss-based financial publication, recently looked at the findings from the UBS Global Family Office report for 2022, wherein it was revealed that family offices globally are increasing their allocations in alternative investments, particularly private equity, with 80 percent of them investing in private equity, up from 77 percent in 2021 and 75 percent in 2020.
High inflation, tightening policies by central banks and rising interest rates are seen as prompting such diversification by family offices. They are at the same time reducing fixed income allocations and sacrificing liquidity for returns, as they increase investments in private equity, real estate and private debt, Finews noted from the UBS report.
Active strategies, alongside illiquid assets and derivatives, are some of the alternative investments thy are considering, with family offices also entering into earlier stages of investment.
Developments in Taiwan In particular, the UBS report’s findings noted that technology, healthcare, social assistance and real estate are common sectors for such family offices’ investments.
All those sectors are prominent on the investment landscape in Taiwan. The island is home to one of the world’s must vibrant technology industries, including semiconductors and, increasing, the auto-electronics and electric vehicle (EV) sectors. Healthcare is another emerging opportunity for investors, both local and foreign. With the continued impact of the COVID-19 pandemic, Taiwan’s quick-testing kit manufacturers have seen strong demand throughout the pandemic and especially this year as Taiwan and other nations have moved from COVID-zero policies to instead learning how to live with the virus, meaning quick-testing became more important. At the same time, Taiwan from the start of the pandemic had several local pharmaceutical firms that could produce vaccines. Meanwhile, real estate has always been a focus of investors in Taiwan. Moreover, the global supply chain reshuffle that has sent Taiwan firms exiting China and moving their factories back to Taiwan has further pushed commercial and industrial-use property prices higher. At the same time, housing prices in areas around science parks and new semiconductor fabs in southern Taiwan have risen significantly. The report also noted that around three-quarters of the family offices planning to increase their private equity investments over three to five years expect the segment will outperform public markets. It added that over half of that group are also looking for types of investments not available in public markets. This trend will likely be replicated in Taiwan, as family office investors are often younger given the generational transformation that is going on currently in Taiwan as many wealthy tech and other firms’ founders retire. In their place are a second generation that are often educated abroad in finance and they understand industry trends well from their families’ businesses. This will prompt them to want to get into earlier-stage investments and often via private equity or venture capital-types of approaches.
A Greater Focus on Sustainability The findings from UBS’ survey also revealed that sustainability has become a common theme for family offices, with more than half allocating to sustainable investments.
Again, Taiwan’s investment industry future will also be linked with sustainable and ESG (environmental, social, governance) investments. Links: UBS: Family Offices Increase Alternative Allocations
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