Global family offices cut U.S. exposure in diversification shift

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Family offices diversification shift

Highlights

UBS Global Family Office Report finds 60% of family offices plan strategic portfolio shifts in 2024, doubling the pace of the previous five years.
Over a quarter of family offices intend to reduce U.S. dollar asset holdings, favoring diversification into Swiss franc and euro as geopolitical and debt concerns rise.
U.S. family offices now average 88% domestic allocation, up from 86%, while non-U.S. peers are reallocating toward home and other regions including Western Europe.

UBS survey highlights allocation changes

As reported by UBS Global Family Office Report, 60% of family offices plan to make strategic changes to their investment allocation in the next year, roughly double the level seen over the past five years. Among those adjusting portfolios, many are reducing U.S. holdings, while North America is the only region globally where family offices on balance expect to cut allocation over the next 12 months.

Family offices say they plan to add exposure in Latin America and Africa, reflecting a wider push for what investors call jurisdictional diversification. Two thirds of family offices now hold bankable assets in at least three jurisdictions, while nearly a third spread them across at least four, including Latin America, the U.S., China, Europe, the Middle East and Asia.

John Mathews, UBS head of private wealth management for the Americas, says concerns have shifted from trade tariff tensions last year toward geopolitical tensions, global debt and interest rates, including their longer-term effects. The survey also finds that geopolitical uncertainty ranks as the top risk over both the next 12 months and the next five years, followed by the threat of a global trade war.

Dollar diversification reshapes global investment flows

More than a quarter of family offices plan to reduce holdings of U.S. dollar-denominated assets, in a move some investors describe as de-dollarization. The Swiss franc and the euro are the preferred currencies for diversification, and nearly half of respondents say they are overexposed to the dollar, while two thirds expect confidence in the U.S. dollar's reserve role to weaken.

The repositioning does not amount to a broad exit from U.S. markets, with advisers describing it instead as a drive for wider geographic balance as wars, tariff changes, immigration disputes and debt battles make the investment landscape more complex. Family offices also plan to increase allocations to emerging market equities, infrastructure and gold, while slightly reducing cash and real estate holdings.

A clear divide remains between U.S. family offices and those overseas. U.S. family offices report that their share of assets invested domestically rises to 88% on average from 86% over the past year, while non-U.S. family offices are moving more money back to home markets or other regions, including Western Europe.

Our earlier USD/BRL outlook examined how the U.S. dollar is trading against the Brazilian real amid rising inflation in Brazil that pushed above the central bank’s target ceiling and complicated the rate-cut path. We noted that this policy uncertainty, together with mixed technical signals, could keep the pair range-bound in the near term while leaving room for downside if key support levels break.

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