Survey: World’s Wealthiest Families Favour Gold & Bonds But Shun Hedge Funds

News - Savings

Tuesday, 17 November 2009 15:00

A survey from newly-launched Family Office Channel offers insight into how wealthy families worldwide are dealing with the recession. The attitudes of the world’s wealthiest families towards key asset classes have changed drastically in the wake of the financial crisis. The results of the survey were disclosed on 13 November.
Reports of a flight to “safer” asset classes were confirmed by the poll. Gold and other commodities have been the biggest beneficiaries, with 67.4% of respondents saying that the likelihood of families investing in this asset class has either “improved” or “greatly improved.” Bonds also saw a large rise in popularity, with 59.3% of respondents citing improved sentiment towards them. Hedge funds were identified as the biggest casualties, with over two-thirds of respondents stating the likelihood of families investing in them had either “reduced” or “greatly reduced.”

Other key findings of the research include:
•   Only 3.4% of respondents said that level of trust in investment advisors and institutions was unaffected following the financial crisis and high-profile frauds such as Madoff and Stanford. Qualitative evidence suggested that many believe failings are systemic and fear more failures and frauds. “The whole financial system now has a problem with reliability, which will last years,” said one respondent.
•   Almost two-thirds said philanthropic activities had been adversely affected by the downturn, but some respondents suggested that some wealthy families are in fact giving more to try and counteract the destructive impact of the recession on charities. One respondent framed this sentiment as: “Many families recognise that charities will also be affected and are therefore trying to ensure grants remain the same as in previous years and feel that their support is needed now more than ever before.”
•   Over half (53.4%) of wealthy families have recently reviewed their tax position and structuring arrangements as a result of increased scrutiny from tax authorities.