How the richest people in the world are investing their money

The world’s super-rich are loving stocks — allocating 28% of
their average portfolio to the asset class, followed by private
equities and real estate.

The UBS and Campden Wealth annual report on family offices has
some important insights on where and how the ultrarich are
investing their money. Family offices are typically private
offices which manage the money of people with significant
wealth. 

The report was based on surveys of 311 family offices
globally, with an average of $1.1 billion under management.
About 40% of the family offices surveyed were located in
Europe, one-third in North America, and the rest in the
Asia-Pacific region and other parts of the world. 

Here is the breakdown on how and where they are investing their
money.  

• Equities: Family offices are allocating 28%
  of their average portfolio to equity markets, up by 4.3
  percentage points over a year. They invested 22% of their
  equity portfolio in developed markets and 6% in
  developing markets. The move paid off with developed markets
  and developing markets and last year returning 23% and 38%
  respectively.
• Private Equity: Private equity remains a
  stronghold in family-office portfolios — commanding a 22%
  share of the average portfolio, up 3.8 percentage points from
  2017. Family-office portfolios posted an average return
  of 18% in the private-equity space, up from 13% a year
  ago.               
                 
                 
• Real Estate: It held its position as
  the third-largest asset class, at 17% of the
  average-portfolio allocation. At 23% of their average
  portfolio, family offices in Europe invested the most in real
  estate, followed by Asia-Pacific (18%) and North America
  (13%).
• Hedge funds: Allocations
  to hedge funds fell for the third consecutive year, amid
  concerns of weak performance and relatively high fees. Hedge
  funds made up just 5.7% of the average family-office
  portfolio, a 3.2 percentage point drop from a year ago.
• Bonds: The average family office
  dedicated 16% of its portfolio to bonds. They invested 24% of
  their bond portfolio in the emerging markets of South
  America, Africa, and the Middle East. 

The report noted how family offices operating across the
different parts of the world favor different asset classes:

• North America invested more in
  developed-market equities (27%) and private-equity funds
  (9.9%).
• Europe preferred alternatives (50%) and real
  estate (23%).
• Asia-Pacific favored equities (28%), real
  estate (18%), and private equity (15%).
• Emerging markets liked alternatives as
  a whole (37%), equities (25%), and bonds (24%).