Improving investment sophistication at family offices is helping drive an increase in risk appetite and a growing focus on alternative assets, analysis from Ocorian has revealed.

Its global research found that 76 per cent of family offices believed increased sophistication was leading to more staff carrying out more complex deals and having to improve their operational infrastructure.

This was contributing to an increased risk appetite, with 66 per cent of respondents saying their family office’s risk appetite will rise over the next 12 months.

Just 7 per cent believed their organisation’s risk appetite will decline, while 27 per cent expected it to stay the same.

Ocorian noted that European equities, emerging market equities, and private equity were the most popular asset classes that family office fund managers expect to increase allocations to over the next 12 months.

There was a growing appetite for increasing exposure to alternative assets, with all respondents agreeing that it was a long-term trend.

Nearly two thirds (65 per cent) said the UK was leading the way on exposure to alternatives based on where assets or family offices were based.

When asked about factors driving increased risk appetites, 73 per cent cited improved regulation, 60 per cent pointed to increased transparency, 53 per cent said they believed markets were ready to recover, and 39 per cent said family offices have been in cash for too long.

However, Ocorian identified a need for regulatory support, with 16 per cent of respondents believing they were in a strong position to meet regulatory demands amid rising complexity, while 56 per cent said they were in quite a strong position.

More than a quarter (27 per cent) believed their ability to meet regulatory requirements was average.

“Family offices have significantly strengthened their operations recently, recruiting more staff and improving infrastructure as they become more sophisticated organisations carrying out more complex trades,” commented Ocorian regional head, private clients, APAC, Andrew Ho.

“Improvements in regulation around riskier assets are a key factor in this transformation, but at the same time, family offices appreciate they need more regulatory support if they are to make the most of the potential opportunities.”

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