A large proportion of family office executives and investors are putting their faith in emerging market equities for the coming year, according to the J.P. Morgan Family Office Survey.
Sixty-seven percent of those surveyed feel equities will perform the best out of all asset classes over the next 12 months and 42 percent believe emerging markets will vbe the best equity performer despite the category's recent rocky performance. European equities will perform the best, according to 35 percent of those surveyed, while 19 percent trust U.S. equities and 4 percent like Japanese equities.
The survey included advisors, investors and philanthropists from 60 family offices in the western United States who attended the J.P. Morgan inaugural Family Office Summit.
A vast majority of the respondents would need to see an increase in 10-year interest rates for bonds of 2.5 percent (51 percent of respondents) to 1.5 percent (44 percent of respondents) before they would shift allocations to the asset class. Forty-five percent identify hedge funds as the most attractive replacement for core fixed income.
The respondents were split on projections for when the Federal Reserve will begin to raise short-term interest rates. While 35 percent of respondents feel rates will hold for another 18 months and 38 percent think it will be two years before the Fed does so and 20 percent feel it could be three years before the Fed takes action, the survey says,
Politics is the biggest culprit as far as challenges to the market are concerned, according to 60 percent of the respondents. Another 18 percent feel stunted economic growth will be the most important market challenge and 13 percent think it is interest rates.
The role charitable giving plays in their overall financial planning was also weighed by those surveyed and 76 percent say their families take a hands-on approach to philanthropy.
Education was cited by 52 percent as the issue most important to their family in 2013, while 19 percent said health was the top area of focus. Most respondents said they would give the same level (34 percent) or more (59 percent) this year compared to the previous year.
“Philanthropy remains a top focus amongst family offices,” says Jeremy Geller, market manager for Northern California for J.P. Morgan Private Bank, and host of this year’s Family Office Summit. “Our ultra high-net-worth clients are increasingly concerned with seeing the results of their contributions and hands-on involvement, and making giving a perpetual and central part of their wealth planning.”
