Trade war seen as biggest threat to investments
Ultra-wealthy families view a global trade war as the biggest threat to their investments in the year ahead, according to a UBS survey of 317 family offices. The survey was conducted online between January 22 and April 4, with additional in-depth interviews carried out between April 9 and May 7 to reflect recent developments.
„Looking ahead to the next five years, follow-up risks such as a global recession, a worldwide debt crisis, or the escalation of geopolitical conflicts are also in focus“, says Tobias Vogel, CEO of UBS Europe SE. „In this uncertain environment, active management is gaining importance: 61% of family offices in Europe now manage their equity positions actively – a clear trend toward risk diversification through flexibility. Hedge funds and targeted allocations in precious metals complement this strategic approach.“
Geographically, investments continue to focus on North America (53%, up from 50% the previous year) and Western Europe (unchanged at 26%). In contrast, the Asia-Pacific region (excluding China with Hong Kong), and China including Hong Kong, lag far behind at just 7% each. US family offices invest almost exclusively (86%) in their home region, up from 74% in 2020. European family offices have a home bias of 44%, with the Middle East ranking second at 21% of assets.
Long-term strategy remains intact
„Despite geopolitical and economic turbulence, family offices remain committed to their long-term strategies. They consistently pursue diversification, return optimisation, and targeted investments in structural growth themes such as generative AI, healthcare, and electrification“, notes Maximilian Kunkel, Chief Investment Strategist for UBS Germany. „At the same time, a noticeable shift in portfolio structure is evident. Cash holdings are declining, while equity allocations – particularly in established markets like the US and Europe – are on the rise. Private debt is also gaining significance, as are bond investments.“
Some family offices are increasingly turning to stocks and bonds from industrialised countries, apparently seeking capital growth and returns in highly liquid markets amid volatility. Sought-after investments include stocks in companies focused on generative AI as well as energy and commodity stocks.
Equity allocations increase
In 2024, global equity allocations to developed markets rose to an average of 26%, and to 27% in Europe. Nearly half (46%) of the surveyed family offices expect to moderately or significantly increase their equity holdings in developed markets over the next five years. A similar trend is expected in fixed income investments, with 23% planning to increase allocations in developed markets.
While family offices slightly reduced their private equity exposure, overall allocations to private markets remained relatively high in 2024 at 21% globally (27% in Europe). For 2025, those planning changes expect to reduce that share to an average of 18%, due to weaker capital markets and fewer acquisition opportunities, which make exits more difficult. Additionally, higher interest rates are increasing financing costs.
Only half have succession plans
Only about half (53%) of the family offices surveyed have established wealth succession plans for family members. Asked why no such plans exist, 29% said the beneficial owners believe there is still enough time. Another 21% said the owners have not yet decided how to divide their wealth. At 18%, the reason given was a lack of time to discuss the issue.
Among families with succession arrangements already in place, nearly two-thirds (64%) cited tax-efficient wealth transfer as the greatest challenge. For nearly half, creating the right legal structure for transferring wealth was the most pressing issue.
