In our 7th episode of the Family Office Vlog Series, Asena CEO Peter Harper focuses on the topic of Family Office Investment Strategies.


Peter Harper: Hey guys. Peter Harper, Managing Director and CEO of the Asena Family Office. For those of you who are not familiar with the business, we’re a multi-family office advising foreign family offices and founders on U.S. direct investments in mergers and acquisitions.

Peter Harper: So, in the last few updates, we’ve delved heavily into the topic of what is a family office and why do I need to know about it. We’ve touched on briefly the type of investments that family offices make in their role, but today we really want to focus on the topic of family office investment strategies. We will backpedal a little bit just to recap on some of the things, I think the key issues that, you know, people need to be aware of about family offices, so we don’t, you don’t have to delve back into other videos to get on top of that, but that’s going to be the focus – family office investment strategies. So, by way of recap, you know, a family office is, you know, effectively an investment office or investment business that has been established to run a family’s money and to administer all the back office and support services that a family needs to operate, right? So, if families of material wealth that have a great degree of complexity need to build effectively a C-Suite team of folks to make decisions around how they should allocate their capital, right, to develop, to generate income, and then how they should manage, so how they should manage, you know, active income-producing assets, and how they should manage assets that are not income producing, that also can have a lot of complexity. So, that’s the boats, cars, houses, planes, etc., right, and the complexity comes with running assets like that, and how to account for, ensure, and protect those things for the broader family, right? So, why don’t folks set that one up? So, for a lot of people that have gone through a material liquidity event, so, that they’ve built a business and sold it, or they’ve inherited a material amount of money, the risk profile, or the issues that they face before and after that event is drastically different, right?  There’s complexity that would exist, will exist in their life that they may not have ever experienced, right? So, there’s this very important need to create infrastructure to adequately support folks who go through that process, right? So, you know, over the last 50 years, and really the last 20 years, has been a massive increase in the amount of family offices that have been established globally, and, you know, part of that has been driven because, you know, previously what would happen when folks would have a material exit event they would ordinarily who have allocated the bulk of their capital to a major money manager to manage that on behalf of the family.

Peter Harper: You know, as the markets became more challenging post the financial crisis, a lot of capital found its way into private markets. So, what’s widely known as Alts; so, private equity, hedge funds, venture capital, and more recently, directs, to try and drive greater investment returns. The returns were not created in the public markets, and so in order to attract higher returns, private capital was looking at stuff that was sort of non-listed private deals. So, that’s the reason people where there’s been this massive increase in family offices. There was a cap; there was a financial motivator for this, but along with that, there was a recognition that okay, if you’ve got a lot of administrative complexity around your private life, so around your non-income producing assets, you need a team of folks that understand how to how to manage those things. For a lot of people, they don’t want the complexity of a single-family office, right, because there is a huge amount of work in just running it, right? Depending on the scale of your wealth, a family may choose to engage a business like the Asena Family Office, which is a multi-family office, so, a business that is designed to manage the complexity of a family’s wealth and assets on a fractional basis to do that on their behalf, right? So, outsource money management and outsource back-office support. Whether that’s because they feel that economically, that they don’t have the capital to support the overhead of a single-family office that, you know, can be five, ten, fifteen million to run just the overhead of a single-family office or because they don’t want the complexity of managing that themselves, right? they prefer to outsource it.

Peter Harper: So, we’ve, again, we’ve done a refresher on what a family office is, what a multi-family office is, and why someone would set one up.  I then wanted to talk a little bit about, you know, the importance of strategy, purpose, and goals when developing an investment strategy. So, for a lot of families that are kind of new to this process and, you know, maybe they’ve been running a business, and all of a sudden, and they’ve always had this sort of private investment approach outside of their business where there was no real rigor to that process, right? So, they invested in whatever they wanted to invest in, right? Because they had liquidity to support that, building that out on a strategic basis from within a family actually requires a huge amount of discipline, right? Because, you’re setting systems and processes and values framework within the family, right? Ordinarily, you’re then building and establishing an investment committee to execute on that, right, and you’re really trying to run the family office consistent with those vision, values, and goals. So, establishing what they are and setting a framework around them is really, really critical.

Peter Harper: So, you know, what are they? What’s different things for different people, but the most important thing at the start is a family understanding how they think and feel about different things, right? You know, these kinds of talk to a couple of trends we’re seeing in the area of family investment strategies. You know, sustainability or impact investing has been a massive increase over the last 20 years in families starting to be very focused around, you know, this notion that not every dollar of income is equal, right? When you’re a family of significant wealth, you can leave an impact both on the family legacy and future generations by investing in a sustainable way. So, you know, how do we feel about climate change; how do we feel about, you know, gambling; how do we feel about the different assets that might invest in, you know, alcohol or whatever else. It’s different people for different things, but it’s very important, it’s very important the family are reliant on how they think about impact. You know, having a rigor around manager selection is really key. So, you know, regardless of whether, if you’re a single-family office and you’re going to invest through money management, you’re going to invest in public and private markets, right? Even if you’re going to largely outsource the investment management function of your family office, right, because you’ve got to appoint external money managers to do that. You have to have a level of sophistication and rigor to be able to assess, to be able to select who’s a good manager, right? So, what’s their track record look like? Are they successful? You know, and then you have to have a system and process to critique them, whether that’s on a quarterly bi-annual, or annual basis, right? And there are businesses out there that, you know, fund the funds with the sole responsibility is just critiquing an entire, you know, a significant number of sorts of active managers in it with various specializations, right? So, having the internal systems and processes to select managers and then review them as far as an investment strategy is very key when you’ve got a significant amount of capital in the market. The second piece that’s really important is that if you if a family office, does intend to invest in Alts, so venture capital, hedge funds, and the product is a little different because it still goes back to that manager selection, right? Whether you’re choosing a manager to run equities or you’re choosing effectively a private equity manager to do deals, it’s the same process. But, on directs, you know, directs and co-invests which are currently the single biggest growth area for family offices, you need to have a system and team in place to source deals in accordance with your values and your investment strategy, underwrite the deals, so determine whether they’re a good deal and whether they fit within your strategy, and then be actively involved in the execution of those deals, right? And that’s, you know, that’s really where Asena plays a really active role in engaging with its clients because that ability to execute on a direct deal requires a huge amount of, sort of, active skill sets, right? Legal, tax, financial, to both source, underwrite, and execute.

Peter Harper: And then, you know, the final thing is just understanding. You know, just understanding five reasons why family offices are focusing on directs, right? It’s a massive focus for us, right? And, you know, this is the main reason why a lot of folks are focusing on directs and why we continue to be bullish on them as a space to, you know, allocate in private markets is because there’s a greater degree of control and decision-making ability, right? You tend to find better value in interest alignment as far as return, right? So, if you do care about impact or various other things, your ability to influence a lot of direct deals is far more substantial than it would be, you know, in a fund or some of the form of structure, there’s reduced fees and expenses. It also allows you to really heavily leverage the strength of a family office network. So really, in my opinion, the single biggest value of a well-established and integrated family office is the ability to leverage the substantial networks that exist that’s around, you know, private capital inside of family offices on a global scale. So, that’s sharing deals, co-investing, and forming alignment as far as areas where there’s shared interest. And then finally, as I said earlier, making an impact. When you are directing an opportunity and you’re investing in something that you think can change the process, impact, you know, impact is key. Cheers.


Do you have questions about Family Office Investment Strategies? Get in touch with one of our Asena consultants for more information.

–Peter Harper