World's richest families see wealth jump despite political and economic turmoil

The family offices which manage the assets of some of the world’s richest dynasties saw an average return of 7 per cent on their fortunes in 2016

Mayfair, one of the wealthiest areas of London

The richest families in the world have had a stellar year financially, despite wider political and economic turmoil, new research reveals.

The family offices which manage the assets of some of the world’s richest dynasties saw an average return of 7 per cent on their fortunes in 2016, according to a survey by Campden Wealth Research and UBS. The average wealth managed by each of the 262 offices polled was $921m.

Returns were boosted by surging equities, with both the Dow Jones Industrial Average and the FTSE 100 rising strongly over the period. Meanwhile, wages have fallen below inflation in the UK and GDP growth has been revised down on both sides of the Atlantic.

Shares and private equity investments now represent almost half of the average family office’s investment portfolio, the report said.

Sara Ferrari, head of UBS’ family office group, said wealthy clients had become increasingly bold with their money over the last twelve months.

“Family offices have been making the most of their ability to embrace risk and invest for the long term, increasingly accepting illiquidity, much like other sophisticated investors. The benefits of this bolder approach are clear, she said.

UBS found that, increasingly, its wealthy clients were looking to see a social as well as a financial return on their investments.

Of the 262 family offices it surveyed, over 40 per cent are expecting to increase their allocations towards impact and environmental, social and corporate governance (ESG) investments.

This was particularly driven by millennials, the report found, with families with children born after 1980 seeing an increase in requests to participate in impact investing.

The most popular sectors to invest in were education, environmental conservation and energy efficiency.

There was also an increase in philanthropic activity, with the average family office giving $5.7m over the past 12 months. Nearly 95 per cent of family offices plan to maintain or increase their philanthropic commitments in the coming year, UBS found.

In terms of particular causes, environmental protection and poverty saw the most significant jump in donations.

Ms Ferrari said: “We know that millennials are driving the adoption of sustainable and impact investing. As they strengthen their skill-sets and assume more control, we’ll see this theme continue to take hold.”