2024 FOX Global Investment Forum – Day 2

One of the most distinctive features of family office capital is the personalized way each family looks at their investment objectives of risk, return and liquidity. This is particularly challenging in an era of rapid technological and informational change that requires balancing the digestion of new information with the reliance on timeless investing principles.

During this forum, the FOX community’s most sophisticated family office investment professionals and Chief Investment Officers gathered to discuss the latest global investment themes, markets, economies, and more.

The forum provided an opportunity to connect with peers from FOX families for a meaningful exchange of ideas and discussions about how to navigate the evolving landscape of investing while exploring numerous asset classes in both the public and private markets.

Navigating the Artificial Intelligence Frontier

• David Blundin
• Moderated by FOX CEO Peter Moustakerski 

Founder and Managing Partner of Exponential Ventures, David Blundin is a 23-time serial entrepreneur and 15-year VC who founded MIT’s first Neural Network AI company and who teaches “AI for Impact” at MIT. Dave brought together his years of personal experience and knowledge along with timely information, to discuss the AI revolution and what our family office community can be doing to prepare.

Poll: What are your feelings about AI?

• Excellent – 52%
• Concerned – 20%
• Scared – 11%
• Still Deciding – 17%

· Do you have an allocation set to AI in your portfolio?

• Yes – 35%
• No – 65%

· Do you have a family member between the ages of 15-22 who uses AI every day?

• Yes – 39%
• No - 41%
• Unsure – 20%

· It is estimated that the AI Industry Spent $50B on the Nvidia chips used to train advanced ai models last year.

· Case Study:

• “Tailbox” uses AI for tourism
  • The first free AI-guided, personalized tour companion of the world
    • Curated Recommendations
    • Instant Insights
    • Last Minute Activities

· Q&A

• What is coming our way in the family office world and how quickly?
  • The generational knowledge gap will get wider and wider.
  • People without knowledge will pile into the industry, so we need to deliberately educate the next generation.
  • Meet and talk to the AI experts for education.
  • Online classes are available – over 10M have taken the MIT course.
• What do you foresee as far as investing advice?
  • Mass amount of value created but a lot of displacement.
• How will open-source models fare?
  • Open AI thinks they are going to win the race.
  • Meta thinks strong AI is pretty far away.
  • There will be available via open source or API for everyone to use and verticalize it.

Investing Globally Across Asset Classes: Trends, Challenges, and Opportunities

• Rick Rieder
• Moderated by FOX Chair Nate Hamilton [QUESTION - DO WE INCLUDE TO BE CONSISTENT - NOTICED NO MENTIONS OF BLACKROCK AS A ENTERPRISE]

Rick Rieder, CIO of the largest asset manager in the world joined us to share his perspectives across asset classes and global markets. He covered key topics such as the US & global economic outlook and opportunities across public and private investment strategies, including sectors expected to outperform and an overview of the key macro and geopolitical risks we should be monitoring.

• The next move is likely a rate cut, probably in the fall.
• It’s a golden age of fixed income – great yields and low volatility.
• With the growth in tech, we can create a very well-rounded portfolio.
• How are rates affecting the real estate market?
  • Real estate is scarce with mass amounts of inflation.
  • Not enough inventory, but home equity is in good shape.
• India and its digitalization is impressive and Japanese equity is interesting, as well as lending in Europe
• It’s a good time to be a private creditor and in real estate.
• What asset class are you most invested in?
  • Public Markets - High
  • Passive index - Low
  • Real Estate - Medium
  • Private Equity - Medium
  • Early-Stage Ventures - Low
  • Credit - Low
  • Cash – Lowest
• What net returns are you targeting for your overall portfolio?
  • 7 – 10% is most expected
  • 10 – 15% second
• What time horizon are you most focused on today with regards to your asset allocation?
  • 5 – 10 Years – High
  • 3- 5 Years – High
  • Over 10 Years – Medium
  • 1 – 3 years low

Portfolio Management in an Age of Change

• Raoul Pal
• Moderated by FOX Chair Nate Hamilton [QUESTION - DO WE INCLUDE NATE TO BE CONSISTENT]

Real Vision Group CEO, Raoul Pal, examined how the last 100 years of fiscal and monetary policy are converging with exponential technologies to create one of the most unique and unpredictable investment landscapes since WWII. The discussion covered the global macro investing backdrop and the outlook on growth vs. value, as well as the investment themes within frontier technology and how to express those in a portfolio.

• What are your biggest concerns about the next 12-18 months?
  • Geopolitics
  • Inflation
  • Debt
  • Interest Rates
  • Elections
• What sectors do you see the most opportunity in the next 12-18 months?
  • AI
  • China Equities
  • Credit
  • Debt
  • Bonds
  • Tech
  • Infrastructure
  • Energy
  • Private Credit
• Diversification is Dead
• The Everything Code
  • GDP Growth = Population growth + Productivity growth + Debt growth
• Since 2008 Everything is Cyclical
• Forecasting the liquidity cycle is simple
  • If the business cycle is cyclical, this cycle is also repeated

Reflections on the Real Estate Market: Evaluating trends and the Role of RE in a FO Portfolio

• Christopher Doman
• Lisa Picard
• Moderated by ________________________. [QUESTION - DO WE INCLUDE NATE TO BE CONSISTENT]

Outside of the core operating business, real estate remains the largest holding of family offices and continues to be the sector in which they remain the most comfortable investing and structuring deal-flow. The 2020s have already brought significant challenges from the prior decade, and individual real estate sectors seem poised to change alongside every other industry.

Experienced family office and institutional real estate investors review the state of the market and touch on sub-asset classes such as commercial office, industrial, multifamily, and the market for ground-up development today. This open-ended panel explored opportunities and risks within the entire real estate sector and discuss practical advice on which markets and asset classes family offices should be evaluating for their own portfolios.

• What will keep you up at night for the next few years?
  • The election and the decisions of the Fed as it relates to rates.
  • We can’t discount a tremendous amount of volatility over the next few years.
  • Combination of micro and macroeconomic concerns.
• What is the impact of technological innovations on real estate?
  • The labor force needs to be completely retrained, especially on AI.
  • Will have to find ways to learn the LLMs and use them.
  • People who don’t train themselves will be moving out of the workforce.
  • AI will create jobs as well as eliminate some.
  • Will be revolutionary for small businesses.
• Where will the cap rates be in 10 years?
  • There is likely a large delta on where economic cap rates are and what is being advertised publicly.
• Thoughts on the data center boom
  • Need to find returns on LLMs quick, but they aren’t making money yet.
  • Need to figure out how to do it efficiently because they are energy hogs.
  • Be cautious around the expansion of this technology, will go out of date quickly.
• Thoughts on the industrial sector trends
  • Some markets are being overbuilt at this point.
  • This is very location dependent.
  • Finding opportunities in truck bay centers, small operators find value in it.
• Coastal market optimism is the main takeaway.

Family Office CIO Panel: Preparing for an Age of Change

• Rostam Zafri
• Dave Furneaux
• Rosemary Sagar

A forward-looking session featuring three young CIOs shaping the investment strategy of their respective family offices. They addressed alignment of the family’s objectives with investment strategies to properly account for the liquidity, total return, and risk goals. Guests will share where they see the most attractive investment opportunities and why, managing family stakeholders and internal decision-making frameworks, succession planning, and perspectives on technology integration, deal sourcing and risk.

• How do you source opportunities?
  • It’s all about the relationships.
  • You have to trust the people you are working with.
• How are these relationships built?
  • Over time and through the investment companies.
• What is upcoming and changing in this space?
  • The next year or two will be difficult.
  • Aligning with leadership teams will be important.
  • Optimistic but skeptical.
• Creating alignment with the family to meet their goals is the most important thing.
• How is the group aligned with incentives that lead to long term behavior?
  • The goal is to fuel passions.
  • The better the office does the more will go to passion project such as the foundation.