The report shows that more than two thirds (70 per cent) of family offices highlighted a trade war as the biggest threat to achieving their financial objectives over the next 12 months. The second biggest concern for more than half was major geopolitical conflict, followed by higher inflation.

Looking five years ahead, those worried about a major geopolitical conflict increased to 61 per cent and 53 per cent were anxious about a global recession resulting from potentially serious trade disputes.

This report surveyed the opinions of 317 family offices worldwide in UBS’s client base between 22 January and 4 April 2025. The average net worth of participating families was $2.7 billion, with family offices managing an average of $1.1 billion.

Despite their concerns, 59 per cent of family offices planned to take the same amount of portfolio risk in 2025 as they did in 2024, staying true to their investment objectives. Forty per cent also see relying more on manager selection and/or active management as an effective way of enhancing portfolio diversification, followed by hedge funds (31 per cent). Almost as many are increasing illiquid asset holdings (27 per cent), and more than a quarter are using high-quality, short duration fixed income, the report reveals. Precious metals, used by almost a fifth globally, have seen their use grow most of all compared with the previous year, with 21 per cent anticipating a significant or moderate increase in their allocation over the next five years. 

Asset allocation
In view of the challenges, some family offices are lifting their weightings in developed market equities and bonds, as they seek liquid opportunities for capital growth and yield in a volatile environment.

Developed market equity allocations rose, on average, to 26 per cent in 2024 and family offices planning to make changes in 2025 intend to increase this to 29 per cent. Over the next five years, almost half of family offices anticipate a significant or moderate increase in their allocation to developed market equities. By contrast, 23 per cent saw themselves doing the same in their developed market fixed income holdings. 

Regional asset allocation tilted mostly towards North America and Western Europe, with some family offices lifting their weightings in developed market equities and bonds; it is likely that they are seeking liquid opportunities for capital growth and yield in a volatile environment, the report reveals. 

The report highlights that family offices in the US and Europe are wary of emerging markets, more so than their peers in Asia-Pacific, Latin America and the Middle East. Globally, family offices allocated 4 per cent to developing market equities in 2024 and 3 per cent to developing market bonds. However, they are most likely to increase their exposure to India and China over the next 12 months.

While family offices are slightly reducing exposure to private equity, allocations to private markets remain relatively high in 2024 at 21 per cent, the report reveals. However, those planning to change allocations in 2025 intend to lower this to 18 per cent on average, with the reductions mainly driven by direct investments, as subdued capital markets and acquisition activity slow portfolio exits, while higher rates make financing expensive.

When broken down by certain regions where family offices are based, the report noted that in the bank's native Switzerland, traditional asset classes account for 56 per cent of Swiss family office portfolios, with 34 per cent in equities and 13 per cent in fixed income. Forty-four per cent were invested in alternative asset classes.

Western Europe was the preferred regional asset allocation (53 per cent), followed by North America (39 per cent) and Asia-Pacific (excluding Greater China) at 4 per cent. In Europe (excluding Switzerland), traditional assets make up 51 per cent of European family office portfolios, with the largest share in equities.

Turning to the Middle East – a growing area for family offices – portfolios are evenly split between alternative and traditional asset classes (50 per cent), with the largest share in equities (27 per cent), followed by private equity (25 per cent), fixed income (16 per cent) and real estate (14 per cent). North America was the preferred region in terms of asset allocation.

Within the US, the bank's report found that alternative investments make up 54 per cent of US family office portfolios, with 27 per cent in private equity, 18 per cent in real estate and 3 per cent in private debt. By comparison, 46 per cent of portfolios were invested in traditional asset classes, with the largest share in equities (32 per cent), followed by fixed income (9 per cent) and cash (5 per cent). 

Artificial intelligence
The report also shows that family offices are keen to invest in emerging technologies, prioritising healthcare, electrification and AI. Most are likely to have clear investment strategies in place for healthcare and/or medicine, and electrification. But they are keen to understand the promise of a range of emerging technologies, seeing opportunities in both public and private markets.

Within operations, they’re most likely to use generative artificial intelligence (AI) for financial reporting/data visualisation and text analysis over the next five years. Only 6 per cent do not expect to use AI, the report reveals. They also believe that generative AI’s greatest beneficiaries will be banks/financial services as well as pharmaceuticals and biotechnology.

Succession planning
With the greatest wealth transfer underway, 53 per cent of family offices globally have wealth succession plans in place for family members, the report shows. However, others are yet to make plans, mainly because beneficial owners believe they have plenty of time to do so (29 per cent of family offices without succession plans stated this). Twenty-one per cent stated that the beneficial owners have not decided how to divide up their wealth, while almost as many indicated that the owners did not have time to discuss it. 

Where families do have succession plans, the greatest challenge is ensuring the transfer of wealth in the most tax-efficient manner, according to 64 per cent of respondents. Forty-three per cent see preparing the next generation to take on wealth responsibly, and in line with family aims, as another great challenge, with only 26 per cent consulting the next generation about the succession plan from the outset. 

With the acquisition of Credit Suisse, UBS manages $6.2 trillion of invested assets as per first quarter 2025.