Single-Family Offices Are Increasingly Exploring New Investment Opportunities

By Russ Alan Prince on October 9, 2017

Read the original article here on Forbes 

A growing percentage of single-family offices are looking for investments that are not correlated to the “traditional” markets. According to Angelo Robles, founder and CEO of the Family Office Association, “Very often, single-family offices represent the ‘smart money.’ They have their hands on the pulse of the investment community and are always seeking high-quality opportunities. Increasingly, single-family offices are identifying places to put their monies that can do well no matter which direction the markets go.”

In a survey of 199 single-family offices, ALL of them are interested in identifying non-traditional but highly credible investment opportunities. An example of this is the increasing amounts of monies single-family offices are committing to crypto-currencies and block chain technology. If these investment opportunities move independent of the stock and fixed income markets, better yet.

Some of the more esoteric investment opportunities some single-family offices are considering include:

  • Litigation financing. Commercial litigation can be difficult, time consuming, and expensive. In situations where the plaintiffs, while certainly justified in suing, cannot afford to do so especially against deep-pocket defendants has led the rise of litigation financing.
  • Seed money for entertainers and artists. Many times, aspiring and talented entertainers and artists have had to deal with significant financial hardships as they pursued their craft and strove to make it big. Some single-family offices are providing economic support for creative and gifted individuals for a piece of their future revenue stream.
  • One-time one-off projects. A growing number of single-family offices are investing in one-time, one-off projects. This covers a diverse range of endeavors and is exemplified by them providing financing for movies and live shows.

“An important consideration with respect to some of the more esoteric investments of some single-family offices is their ability to mitigate taxes,” says Rick Flynn, Co-CEO and founding partner of LVW/Flynn and author of The High-Functioning Single-Family Office. “As single-family offices have become more and more professional, tax mitigation tied to their investment portfolios has become a critical factor in driving the appeal of private placement life insurance, for example.”

It is evident that a meaningful percentage of single-family offices are looking to incorporate non-traditional investments into their portfolios. Part of the attraction of these investments is the ability of senior management to minimize the tax implications.