Long-term approach paid off for family offices during recession

Single family offices in the US and Europe were largely well prepared to ride out the financial crisis of 2008 and the subsequent difficult market environment, making very few strategic changes to their asset allocation.

That’s according to new research by American investment advisory firm Cambridge Associates, which surveyed 40 single family offices in the US and Europe in 2011.

The report found that the family offices, which had a median asset size of around $530 million (€411 million), focussed more on tactical changes, such as increasing liquidity and cash reserves, to offset the effects of the post-2008 volatile market.

"It's evident from the research that family offices were already well configured, and although in many cases they tactically made adjustments, strategically most were prepared going into the financial crisis," Douglas Macauley, managing director of Cambridge Associates, said in a statement.

While only 27% of the family offices surveyed changed their approach towards allocation of assets, more than 60% increased their liquidity and cash reserves.

The lack of change to management policies was thanks to the long-term approach taken by family offices, as well as the availability of sufficient resources to ride out the worst of the crisis, the study said.

"When it comes down to it, the most common response to questions about changes to family office oversight and management policies in the post-2008 period was that none [were] made. Presumably family offices in general were already comfortable with their oversight and management practices," added Macauley.

Cambridge Associates provides investment advice and research to global ultra-high net worth clients, and serves more than 900 investors with a total of $3 trillion in assets under management.