Family offices respond to Brexit - with detached coolness

Some family offices have made money from the turmoil to markets Brexit unleashed last Friday, as Family Capital has documented. But what do family offices feel about Brexit from a wider perspective?

Family Capital spoke to three European single family-offices to get their views. And, despite one expressing some concerns about the wider political implications, all three were sanguine about how Brexit will affect their investments. That’s largely because they all follow a long-term approach to returns.

As for Ferd, we roll with the punches and look for opportunities as markets overreacts

Johan Andresen, chairman of the Norwegian private investment office Ferd, was concerned about the political ramifications. “I’m primarily worried about the impact on Europe (of the Brexit vote),” he says. “The European Union is a peace project. The economic and other aspects are needed as incentives for staying together - and people are not convinced that they benefit anymore. That view we need to change - and fast.”

But from an investment perspective, Andresen wasn’t too perturbed. “As for Ferd, we roll with the punches and look for opportunities as markets overreacts.”

A London-based family office, who wanted to remain anonymous, saw it as business as usual. “Although opinion as to the merits of Brexit may be divided, undoubtedly restoring to Westminster (the UK government) the sovereign ability to make laws to be interpreted exclusively by UK judges should in the medium and longer term be positive for the UK and its businesses.”

He added: “The UK will also post-Brexit be likely to remain a very substantial trading partner for the remaining EU members, and the balance of this trade is likely at least for the short and medium term to remain overwhelmingly in favour of the EU. Thus, irrespective of what certain EU officials and European politicians may be saying, there will be plenty of, for example, German workers, directors and trade unions wanting to see harmonious trade relationships maintained. The fear that punitive terms might be applied to Brexit therefore seems to us to be somewhat overdone.”

When it comes to investments, like Ferd, he wasn’t too concerned. “In terms of the asset classes in which we invest, we have significant exposure to managed funds investing in public and private equities in North America and Asia, and these are not substantially impacted by any Brexit fallout.”

So, despite the undoubted challenges and uncertainties, we consider that our patient investment style should still prevail over the long term

He added “My colleagues dealing with our unlisted investments will of course have to adjust their pricing and valuations to take account of such matters as any tightening of bank financing, but their methodology should remain substantially unchanged. Finally, our investments in the public UK and continental equity markets are relatively more vulnerable to any post-Brexit market adjustments, but even here portfolios have been constructed to build in defensive qualities. So, despite the undoubted challenges and uncertainties, we consider that our patient investment style should still prevail over the long term.”

A chief investment officer of a German-based family office was also unperturbed by Brexit. “There will be short-term volatility and this will present some opportunities for smart hedge fund managers. But I’m not too concerned about any long-term consequences of Brexit on our portfolios. Our investments are diversified enough to ensure any major market disruptions caused by events like Brexit will have minimal affect. And, don’t forget, we are playing the long game when it comes to investments.”