Family office offers retail fund

The recent launch of a retail fund by Iveagh, the London-based private investment house created to manage the Guinness family wealth, can be hailed as a significant development in the family office industry. The Iveagh Luxembourg-domiciled Ucits III fund seeks annualised returns of 9.5 per cent using a multi-asset approach and it has a minimum entry level of just £50,000 (E63,000). The concept of a family office offering products to the market place is certainly not new, but it is believed to have been mainly confined to the funds of hedge funds and private equity arena. “This fund was launched to meet the demand expressed by our existing clients, both family offices and groups of retail investors,” that use investment advisers like Chamberlain de Broe, said John Ricciardi, who manages the fund with Cambiz Alikhani. “The process that we are employing to manage the Guinness family wealth does have the opportunity to have a commercial bent to it,” said Mr Alikhani. “The asset allocation and optimisation work we do, the tactical asset allocation we employ, which can really be done with proprietary econometric models, is very difficult to replicate.” While alternative investments such as hedge funds and private equity, which tend to have long lock-ups are also employed to manage the family money, the fund makes large use of liquid investments such as exchange traded funds. In order to be able to offer investors a retail fund, it is also essential to overcome that protectiveness that wealthy families tend to have about revealing the performance of their investment. “It is more likely that you get publicity of your negative performance than for your positive one,” said Mr Alikhani. “People think that, if this probability exits, they’d rather avoid it.” Alex Scott, chairman at multi-family office Sand Aire believes the offering of retail funds from family offices is an “an interesting evolution”. “As this market evolves there will be different interpretations of what family offices are about,” he said. “My own interpretation is relatively narrow,” said Mr Scott, explaining that Sand Aire, which has $2bn (E1.35bn) of assets under management, aims to create “a tailored response to individual families’ requirements,” thus not encompassing a retail product offering. The reason why families seek out the services of multi-family offices is that they are focussed, he said. “And focus is generally associated with the capacity to deliver the required return and, indeed, other services associated with the family office proposition.” Wealth management consultant Michael Maslinski thinks that a family office offering retail funds is “conceptually a sound idea but with lots of pitfalls along the way.” It is important to consider, for example, whether the requirements of a family reflect the needs of the retail market. “Also, a retail fund needs to have the efficiency of a scaled operation as opposed to the individualism of a family office.” Launching a retail brand can also be distracting to the core activity of running a family wealth, he said.

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