Wealthy Global Families Keep Smiling On US Stocks – Bernstein Private Wealth

Tom Burroughes

29 April 2024

Global wealthy families continue to position for US public equity markets to perform well relative to rivals, , says although the US economy is likely to slow in early 2024, the US firm thinks that markets will focus on faster growth in the second half of 2024 and into 2025.

Alternatives
Against this background, and given the long-term timescales for wealthy families, they’re looking at alternatives to public markets, and there is a strong interest in private equity, venture capital, and the like, said Bates.

“We can see families are leaning into private credit,” Bates said, to give one example.

The failures of some regional banks (First Republic, etc) has focused attention on the merits of non-bank alternative sources of credit, he continued.

Risk types
Asked about risks and how the firm considers this, Bates broke it down into three areas: Internal risks (family dynamics, etc); risks to assets (asset allocation and location), and the risks posed by third parties.

For example, on the third-party risk issue, counterparty risks are those that family offices, for example, must comprehend and gain a focus on, Bates said.

The environment for investing has also changed significantly in more than a decade since the start of the post-global financial crisis equity bull run, Bates said. After more than a decade of ultra-low/negative rates, playing the Beta game to capture stock returns will not be as easy, requiring more active management instead.

Shocks and impact
It appears that families aren’t as prepared for shocks as they should be, Bates’ colleague said.

The firm hosted summits for families, and recently held one on governance for crises. It was found that only a few families have a plan for how to deal with shocks of some kind, Smith told FWR. And they want to make an impact: “Families are asking us about how we can change the world.”