AF REPORT - Family Offices in Focus: Strategic Asset Allocation Across Boarders

Participants:

Lixia Zhu, Principal, 76Columbus

Hampton Tao, Investment Manager, New Heritage Group

Eesha Khader, Director of Investments, AKG Investments

Conrad Ho, Co-Founder Talent Co-Op

Major Trends for Strategic Assets Allocation Across Boarders

Cross-Border Allocations and Globalization

• Family offices are increasingly diversifying globally, seeking opportunities across regions, including Hong Kong, and the Middle East.

• Cross-border allocations are not only about financial returns but also access to markets with strong institutional demand and talent pools. India is highlighted for its tech talent and scale, while Saudi Arabia stands out for its institutional appetite and supportive economic leadership.

• Hong Kong is widely recognized as a leading financial center in Asia, distinguished by its robust access to both capital and highly skilled talent.

  
  

Shift Towards Private and Alternative Markets

• There is a movement away from public markets in some regions and a strategic doubling-down on private equity, venture capital, and real assets.

• Offices are actively allocating to emerging and undervalued companies, focusing on regions with high growth potential, particularly within private markets Middle East and Asia regions.

• Technology is central, with deep tech (AI, machine learning, quantum computing) and education investments gaining momentum, especially in emerging markets where the demand for tech talent far outpaces supply.

• Cryptocurrency, once considered too volatile, is now being approached through market-neutral hedge funds to balance risk and liquidity, providing more stable returns and monthly liquidity for institutional investors.

  
  

Strategic Asset Allocation and Risk Management

• Panelists reinforced the need for sophisticated asset allocation, emphasizing the importance of understanding risk tolerance, liquidity requirements, return targets, and capital lockup periods.

• ·The evolving role of the family office is toward greater professionalism and strategic partnership, often working closely with external asset managers, banks, and specialized funds.

  
  

Identifying and Advancing Strategic Opportunities

•  Open-Source Tech Contributions: Encouraging company tech teams to participate in open-source data computing libraries (e.g., nFocus Solutions) to drive industry innovation.

• Talent Development in Emerging Markets: Supporting apprenticeship and talent development initiatives, such as the Talent Co-op programs in Africa, to address the vast tech talent gap.

• Crypto Hedge Funds: Exploring market-neutral crypto hedge funds, recognized for their lower volatility and attractive liquidity features, as part of a well-diversified alternative strategy.

• Deep Tech and Education: Investing in advanced engineering, scientific innovation, and education platforms to close the skills gap and drive long-term growth, with a focus on markets like Saudi Arabia and India, where digital and educational transformation is underway.

Distinct Markets, Shared Opportunities: Unlocking Collaborative Value Between Hong Kong and the Middle East

Hong Kong - Global Financial Gateway Empowering International Investment and Family Office Growth

• Acts as a global financial center and gateway for both inbound and outbound investments, particularly linking Mainland China with international markets.

• Key objective is leveraging its top-tier infrastructure for fundraising (e.g., leading IPO volume) and providing policy-driven incentives for asset managers, talent attraction, and business development.

• Focuses on maintaining its reputation as a top choice for international business, offering an environment with favorable tax policies and robust family office support.

• Takes a pragmatic approach grounded in longstanding financial sector expertise, emphasizing rigorous due diligence and leveraging regional knowledge for cross-border investments.

• Positions itself as a facilitator of global capital flows, drawing on its “East meets West” environment to maximize access and execution.

• Encourages innovation via policy, while benefiting from proximity to China’s growth engine.

Middle East - Accelerating Economic Transformation through Vision-Driven Capital Deployment and Innovation

• Driven by ambitious national visions (like Saudi Vision 2030) to diversify and expand economic dynamism, with an emphasis on institutional capital deployment and public-private alignment.

• Objectives center on scaling up portfolio allocation in rapidly growing sectors (such as private equity, tech, and real estate) and fostering entrepreneurial ecosystems.

• Strong drive to channel capital into development projects for regional transformation and global impact, while also attracting top talent from abroad.

• Embodies a transformative mindset, with leadership, corporates, and citizens uniquely aligned for ambitious economic expansion.

• Family offices are highly active and hands-on, supporting companies through strategic guidance, capital structuring, and market access rather than relying on passive investment.

• Focus on sectors with high impact, like tech and education, is driven both by private and public institutional objectives, with robust government support and alignment.

Pathways for Collaboration

Hong Kong and Middle East family offices, though distinct in objectives and operating culture, have significant potential for collaboration. Their complementary strengths—Hong Kong’s financial infrastructure and global gateway expertise, and the Middle East’s access to institutional capital and ambitious growth—pave the way for powerful strategic partnerships.

Joint Cross-Border Investments

• Hong Kong offices can provide expert deal structuring, regulatory navigation, and access to Mainland China capital markets, facilitating Middle Eastern entry into Asia.

• Middle East family offices offer substantial capital pools, long-term investment horizons, and a strong appetite for high-impact projects, making them ideal partners for Hong Kong offices seeking co-investors or anchor capital.

Co-Development in Growth Markets

• Both regions target emerging markets. By sharing due diligence networks, co-investing in private equity and venture funds, and pooling expertise, they can access and scale opportunities more effectively.

• Such partnerships can also derisk exposures by combining local knowledge and investment discipline.

Financial Innovation & Alternative Assets

• Middle East’s willingness to invest in new asset classes (e.g., market-neutral crypto, deep tech) matches Hong Kong’s mature infrastructure for fund creation, legal structuring, and product distribution.

• Collaborative product development, such as setting up Asia-MENA themed funds or crypto hedged vehicles benefits both sides.

Knowledge and Talent Exchange

• Hong Kong can help Middle East partners build and professionalize family office operations, streamline risk governance, and implement advanced asset allocation frameworks.

• Conversely, Middle East entities can share expertise on large-scale project execution, real asset development, and navigating ambitious national economic transformations.

Policy and Ecosystem Building

• Both regions are developing family office-friendly policies. By aligning or at least harmonizing regulatory initiatives and talent attraction programs, they can amplify advantages for cross-registered or co-located investment vehicles.

Overcoming Differences

• Cultural Intelligence: Regular joint forums and closed-door summits can increase trust, harmonize expectations, and build personal relationships.

• Investment Alignment: Starting with co-investments in neutral markets (like Southeast Asia or Africa) reduces home-market biases and builds operational rapport before expanding into more strategic or sensitive sectors.

• Mutual Education: Exchange programs for next-gen family office leaders and investment managers can nurture a pipeline of globally fluent talent who understand both Hong Kong and Middle Eastern approaches.

Despite their foundational differences, Hong Kong and Middle East family offices are well positioned to form symbiotic alliances. Their collaborative potential hinges on leveraging Hong Kong’s market access and financial discipline alongside the Middle East’s capital and developmental ambition, creating a diversified, global investment footprint and supporting broader economic goals for both regions.

Summary

Family offices are increasingly pursuing global diversification strategies, expanding cross-border allocations to capture both financial returns and access to institutional markets and talent pools.

The trend toward private and alternative markets has accelerated, with many family offices reallocating away from public securities in favor of private equity, venture capital, and real assets, especially in regions with high-growth potential. Investment priorities are shifting to emerging and undervalued companies, with a particular focus on the Middle East and Asia.

Technology-led sectors, including AI, machine learning, quantum computing, and education, are experiencing increased capital inflows, as the gap between tech demand and available talent in emerging markets broadens.

Cryptocurrency, previously viewed as volatile, is being integrated into family office strategies via market-neutral hedge funds, balancing liquidity and risk while providing more stable returns and monthly liquidity to institutional investors. Panelists at recent industry forums stressed the need for advanced asset allocation models, giving priority to risk tolerance, liquidity, targeted returns, and lockup periods.

Family offices are becoming more professionalized, marked by closer collaboration with external asset managers, banks, and specialized funds. Noteworthy strategic initiatives include supporting open-source technology contributions to stimulate innovation and backing apprenticeship programs to help bridge significant gaps in tech talent in emerging markets. These evolutions depict family offices embracing global reach, sophisticated investment management, tech adoption, and talent development for sustainable growth.

Contributor: Inna Le Guen, CEO, Management Advisory Ltd