Are family offices any good at investing? Hard to tell


Family offices might have a considerable amount of mystique around them – most of it positive – but are they any good at investing? The short answer is that it’s hard to know.

When it comes to single-family offices it’s difficult enough to know their names, let alone whether they are any good at investing. They, unlike multi-family offices and wealth managers, don’t have to tell anyone.

But here’s an interesting theory – because the individuals and families that set them up have vast fortunes, family offices are under a lot less pressure to perform than their counterparts in the commercial world. Of course, this is only a theory. It could equally be argued that given the “alpha” nature of those that do set them up, nothing short of an extraordinary performance will be accepted.

The trouble is that it’s hard to know either way. Apart from anecdotal evidence that says that Michael Dell’s MSD Capital and Bill Gates’ Cascade Investment make good investments, there’s no way of knowing how good all their investments are at a given time. There are no family office benchmarks, except for their own internal ones, and virtually no way of judging their performance against that of other family offices.

Family Capital wonders whether family offices would like to know more about how their investment performance compare with other family offices. Most probably don’t – as long as they are keeping their owners happy, why should they be compared with other family offices?

But wouldn’t the families themselves like to know? Please feel free to respond to Family Capital if you think so…

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