Ditching the US dollar: How family offices are reacting to geopolitical risks, Pg16

Key Highlights:

• UBS report (May 28) indicates that 65% of family offices anticipate a weakening of confidence in the US dollar's reserve status.
• Family offices are considering reducing US dollar exposure and diversifying regionally due to rising geopolitical risks.
• North America remains the largest allocation for family offices, but they plan to expand exposure to Asia Pacific, Greater China, and Western Europe.
• 65% of family offices have invested across the AI value chain, including data centers, software, and semiconductors.

Detailed Insights:

• Family offices are private wealth management firms serving ultra-high-net-worth individuals (UHNIs), managing wealth across generations.
• The report analyzed 307 family offices across 30 markets, with each managing an average of $1.3 billion in assets.
• Participating families had an average net worth of $2.7 billion, with total wealth amounting to $627.4 billion.
• Geopolitical uncertainty is driving adoption of multi-currency frameworks, with the Euro and Swiss Franc as preferred alternatives.
• Middle East family offices show the highest planned portfolio change globally (82%), anchored in North America (50%), with exposure to Western Europe and the Middle East.
• US family offices exhibit the strongest home bias, with 88% of portfolios allocated to North America.
• Interest in defense and security infrastructure (39%) and broader infrastructure investments (33%) is growing, reflecting geopolitical considerations.
• AI is the top investment theme (65%), with family offices allocating funds towards power, resources (37%), infrastructure (37%), and AI-enabled healthcare (33%).
• Only 24% of family offices invest in crypto and digital assets, typically at low single-digit levels (around 1%).
• Gaps exist in governance frameworks and succession planning, creating risks to long-term continuity despite adoption of institutional-grade practices.

Key Concepts Involved:

• Family Office: Private wealth management firm serving ultra-high-net-worth individuals.
• Geopolitical Risks: Risks associated with political relations between countries.
• Artificial Intelligence (AI): Simulation of human intelligence processes by computer systems.