Europe’s richest families have suffered the lowest returns on their fortunes for five years, after economic turmoil pushed them to park too much money in underperforming safe havens, a report said on Tuesday.
The survey of 60 family offices – mini financial services firms set up to look after the wealth of superwealthy dynasties – found annual returns on investment portfolios dropped to as little as a quarter of what they had reaped in 2011.
The report, by data company Campden Wealth and Swiss banking group UBS AG, found offices running the fortunes of single families achieved an annual return of 3.6 per cent, against a target of 8 per cent.
Larger entities representing multiple families returned just 2 per cent, missing targets of around 5 per cent.
A fifth of offices recorded losses over all, the report said, compared with more than 8 per cent in 2011 and up to nearly 12 per cent in 2010.
The survey, now in its fifth year, covered family offices running between €50-million ($65-million) and €1.5-billion in assets.
“Offices admit they could have performed better if they hadn’t held so much low-performing cash, or real estate, because some stock markets and asset classes such as government bonds moved ahead strongly,” the report said.
Respondents to the survey are feeling chastened by a grim year.
“We have not performed as well as we would like or need to sustain our growing family’s needs,” said one.
“When we conducted an analysis of our investment style we found that we had broken some of the fundamental principles of investing that have serviced the family very well over the years. This has not delivered the right results.”