The most comprehensive family-first study of its kind, the IMD-FNB Global Family Office Report, is now available and we are proud to have been contributors.

Family offices are experiencing a profound transformation. Once quiet back-office structures, they have become strategic engines at the heart of family wealth, legacy, and innovation. How do family offices evolve, adapt, and redefine themselves as families grow, generations shift, and the pace of change accelerates?

A few highlights:

There are very few conversations about the market these days that do not include a reflection over whether the US equity market is in a bubble. Recent market gyrations reflect the unease investors have as performance continues to be strong. This is despite mixed signals from economic activity and a level of policy uncertainty that would normally be a deterrent to long term decision making. We think it is naïve to be complacent about valuations, but it is equally problematic to panic.  

Investors have grappled with the question of currency allocation this year, triggered by the sharp depreciation of the dollar against most major currencies. While a sharp currency move is understandably a source of concern, we think it is important for investors to think about the various underlying questions before considering portfolio reallocations to reflect views on particular currencies. 

In early March, we wrote a note highlighting the uncertainties and complexities arising from the Trump Administration’s trade policy intentions. Based on our analysis we increased our overweight to fixed income by reducing equities.

Since we established Parkview in 2011, we have often debated whether we should include gold in our standard asset allocation. We have not done so. I have always taken the view that because gold is an asset that does not generate a return, it is not possible to value it with any degree of consistency. Nonetheless, we recognise that gold has a special place in the imagination of some investors. For investors who have a very strong conviction for such an allocation, we have accommodated their requests.  

I try to avoid writing about currencies. This isn’t because I find them uninteresting. Rather, it is because most currency discussions invariably involve taking a directional view.  Anyone familiar with exchange rate models, or the track record of professional forecasters, would appreciate that this is a fool’s errand. However, we are at a moment in the history of the international financial system when a discussion about the future of the dollar cannot be dismissed.

The US economy has entered a period of heightened economic policy uncertainty.  Significant policy changes were anticipated under the Trump administration. This includes trade protectionism, finding ways to reduce government expenditure, and delivering on tax reductions in the next budget. All of these policy areas are being tackled. However, the manner in which policy is being conducted exposes businesses to considerable uncertainty. This is happening at a time when some indicators of real economic activity have weakened considerably.

The past year has been one of positive surprises. Inflationary pressures were brought under control in most countries. US economic growth remained strong, exceeding most forecasts.  Equities and credit performed well.   

As we head towards a very consequential US election next month, we are balancing our positioning between two opposing forces. The first is the strength of recent economic data. The second is the inevitable uncertainty that comes with a change in policies.