Rick Stone, a former partner at Cadwalader, Wickersham & Taft, sees treacherous times ahead for family offices trying to deploy cash.
The head of Stone Family Office said he doubts the bond market will provide any real return over the next decade, that equity markets will suffer a substantial drop and then be flat, and that too much venture capital and private equity money will continue to chase too few opportunities.
“It’s a very hard time for family offices to allocate money,” said Stone, 60, whose initial wealth came from class-action litigation fees.
Stone has a good vantage point on the action, since he runs the bi-monthly meetings of the Palm Beach Investment Research Group, a network of 35 family offices in Palm Beach, Florida. “The areas to invest in are fewer, and there is a lot of money looking for those spaces,” he said.
That view of the markets is shared by many of the 360 global single- and multi-family offices surveyed for the 2019 UBS Global Family Office Report, which was done in conjunction with Campden Research and released Monday.
A majority expect the global economy to enter a recession by 2020, with the highest percentage of gloomy respondents in emerging markets. About 42% of family offices around the world are raising cash reserves.
“There’s more caution and fear of the public equity markets among ultra-high-net-worth investors,” said Timothy O’Hara, president of Rockefeller Global Family Office. “That has more people thinking about private investments, alternative investments or cash.”
Jeffrey Gundlach, chief investment officer of DoubleLine Capital, said this month he thinks there’s a 75% chance of a U.S recession before the November 2020 presidential election, while the World Bank cut its 2019 global forecast to the slowest since the financial crisis a decade ago. More than two thirds of European family offices surveyed by UBS, meanwhile, think Brexit will hurt the U.K. over the long-term.
The UBS/Campden report offers an insight into the discreet world of family offices, which manage the fortunes, tax affairs and even lifestyles of the wealthy.