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How to approach family offices - advice from one U.S. family office

New York: Family offices are enigmatic creatures not only to the general public but also to many in the money world.

There have always been questions about how these financial powerhouses that invest wealthy families' fortunes make investment decisions. These questions are now heard more often because the economic downturn has made fund-raising a more difficult nut to crack.
 
No doubt, some of the family offices are taking blows from the cash crunch, but many say their investment priorities have changed little. One single family office in New York City, which declined to be identified, observed that family offices invest for the long term and that they always take into consideration ups and downs in the marketplace when they devise their investment strategy. What do they, then, expect from money managers now?

Here is what one U.S. family office has to say, though this may not be typical:
 
"We will consider investments that are primarily based in the United States of America.
We are NOT interested in any investments involving publicly traded securities like stocks, bonds, futures, commodities, currencies, or options. If you are a broker trading in any public market or exchange, do not contact us. We are not interested!
If you are not a broker trading in any public market or exchange, there is a very good chance we will consider your proposal. Please e-mail (or if you must mail) your investment information to us first before doing anything else, if at all possible. There is really no point to preliminary contact. "

"We are looking for investments within the following profile:
Some guarantee for return of capital ;
Some guaranteed return on capital;
if the guaranteed return is> 1 percent and <5 percent, then you must show a tremendous long-term benefit, for example, 100 percent to 200 percent over the next five years;
if the guaranteed return is> 20 percent per year, then some long-term benefit or possible benefit over the next five years is a big plus;
if guaranteed return is <1 percent or 0, then you must show a 300 percent to 1,000 percent return on invested capital over the investment term or the potential for such a return; and
If your investment proposal fit the above profile, then send us an e-mail explaining how.

"Use lots of numbers, we really like numbers. Spreadsheets are really good.
Don't try to sell us on the idea. Sell us on the numbers. Tell us how you make the numbers.

"We detest hyping the idea. Don't hype us!"

Source: The Capital Express (www.TheCapitalExpress.com)