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December 09, 2015 at 06:28 AM
A new study released Thursday by iCapital Network finds that single-family offices favor private equity investments mainly because of their strong performance, especially in contrast to other vehicles and asset classes in their portfolios.
The study found that 62% of SFOs currently invested in private equity. Of those, 94% used funds and 40% also invested directly, possibly alongside managers and in “club” deals with other family offices.
“In our view, the potential for superior investment returns is the single most influential factor in why private equity is viewed so favorably by single-family office investors these days,” Lawrence Calcano, managing partner of iCapital Network, said in a statement.
The report was based on data collected in 2013 and 2014 from 162 single-family offices with an average net worth of $919 million and average investable assets of $407 million.
Fifty-five percent of the SFOs were located in the U.S., 20% in Europe, 19% in Asia and 7% in South America.
According to the study, 91% of SFOs allocated 10% or more of their total portfolio to private equity investments. Within that group, 13% allocated between 20% and 50%.
Another 8% allocated more that 50% of their portfolios to private equity. The report said this could be a result of the family’s investment strategy or a big privately held asset or a combination of the two.
(The Tiger 21 network of ultra-wealthy U.S. investors recently reported that its members’ allocation to private equity accounted for 20% of their overall portfolios.)
