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World’s wealthiest families are stockpiling cash

A majority of the 350 global single- and multi-family offices surveyed for the 2019 UBS Global Family Office Report expect the global economy to enter a recession by 2020, with the highest percentage of gloomy respondents in emerging markets.

The report was released Monday this week.

“There’s more caution and fear of the public equity markets among ultra-high-net-worth investors,” says Timothy O’Hara, president of Rockefeller Global Family Office.

“That has more people thinking about private investments, alternative investments or cash.”

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. Taxing the super-rich is increasingly becoming a topic of discussion in North America ahead of next year’s U.S. presidential election.

Family offices have become a greater force in global financial markets. Campden estimates that such firms manage around $5.9 trillion. The offices in the UBS survey had an average of $917 million under management.

Too few opportunities for private equity money

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, whose initial wealth came from class-action litigation fees.

About 42% of family offices around the world are raising cash reserves.

Source: Bloomberg

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