Different approaches to managing and growing wealth.
Investment decisions at China’s HT Capital are made by an investment committee, which has three family members from both the first and second generation amongst its seven members. The office’s interests are broad, and very entrepreneurial, explains second-generation family member Margaret Zhao. “We’ve been investing for more than 20 years now, and we have learned many lessons along the way. We have hundreds of investments in all sorts of industries, but right now we are interested in the top tier funds in all asset classes and in co-investing in high growth economics and industries. Our specialty is in picking the right general partner [an external business partner who co-invests, provide deal/investment leads, shares the profits and liabilities for investment/s] to work with,” says Zhao. Family members, including the first-generation patriarch, are closely involved in decision making about which investments to pursue. The single-family office took steps to professionalize its operations approximately five years ago, and since that time a seven-strong investment committee, which includes three family members (including Zhao), reviews potential investments and votes on whether to pursue them. The family patriarch (Zhao's father) still has the right to veto a decision, but this rarely happens. Multi-family office Aglaia’s operational style offers its clients a unique opportunity: to collaborate on investments that the office is pursuing, while having its own financial strategies and independence.
For his own investment guidelines, Jessen chose to retain the same investment strategy as his single, Swiss family office on establishing Aglaia in Singapore back in 2011, which he describes as “relatively conservative.” “I basically adopted the same investment criteria that we had in Switzerland: while a few targeted individual private equity placements are made, the bulk of the portfolio consists of a combination of 50 per cent equities—only blue chip, and 25 per cent bonds—only blue chip. And then it's 25 per cent cash or cash equivalent. A certain amount of gold is kept. No hedge funds. And the reason we do that is because we take risks in our business, so we want a relatively conservative style of financial management at the family office side. No investment is made or cut without my signature on it,” he explains. Being a responsible investor is important at Maitri Asset Management. The office’s investment division includes a dedicated ESG team, which has developed a proprietary Responsible Investment Approach.
“The key goal of a family office is to preserve the family’s wealth and find a purpose in the world. For us, it goes beyond the financial returns, as the family is ready to be involved in projects that do good. We therefore think about what we do in three buckets: philanthropy, sustainability and impact,” says non-family CEO Manish Tibrewal.
Maitri is a signatory of the United Nations-supported Principles for Responsible Investment and the Singapore Stewardship Principles, which guided the development of its Responsible Investment Approach. Twenty-five per cent of the office’s earnings are directed to the Ishk Tolaram Foundation, which was established by the family as the next step in a 100-year history of philanthropy. At the Tsao family office, investment activities are governed by a documented and written investment policy and process. It takes care to ensure the bulk of its business investments fall in the category of ‘do no harm’.
The office’s investment process is reviewed annually, or when new asset classes or strategies are introduced. Dr Mary Ann Tsao says the family’s four main focal areas are philanthropy, foreign investment, ESG and impact investment, and that the family office engages external fund managers. “Over and above commercial and financial metrics, the family office pursues a strategy of ESG and impact investing and is guided by documented processes. The investment mandate specifies ranges and limits for each asset class, from equities to fixed income to real estate and alternatives. It specifies counterparty limits, diversification and concentration limits, and the liquidity profile of the portfolio.” “Long termism, careful diversification and preservation tempered by a necessity of growth have always been our core investment principles,” says Applerigg founder, Alexander Scott. “Provincial was a single stock, single product company. But you can't be owners of an insurance company (or any single company) and be diversified in your risk. It’s a single-stock portfolio, so your entire capital is exposed to one risk. That’s fine when your business is growing fast, but less so when growth slows. There’s always the risk that your company may cease to exist due to factors beyond your control. Having made the decision to sell our original company, diversification has been an ongoing principle; let’s be careful but let's also be ambitious.” In recent years, the family office has been “substantially simplified”. Sandaire, the multi-family office that Scott established in 1996, was sold to Schroders in 2020, and Applerigg remains as a single-family office. One external organization now oversees 90 per cent of the family’s assets, including all its liquidity. The family’s incoming fifth generation has used this change in approach to re-orientate its investment brief to focus on growing the family’s wealth in a do-no-harm, sustainability, and impact-focused way. The remaining 10 per cent of assets are actively overseen and invested by Applerigg, the family’s family office. Many of the family’s 100 or so members are active philanthropists, but they manage that privately, not through the family office. Our anonymous participant from Beijing shared that they consider a multi-family office a safer and more strategic environment for safeguarding and growing wealth than an external wealth manager. At this family office, the second-generation family member has a separate investment company that manages 100 per cent of the office’s wealth, along with the wealth of two other families.
The family member, who is Vice-President and CIO for the family office, has had complete autonomy in decision making for the past two years. The investment company is where they focus most of their time and effort.
