Case Study

_{Key Challenge}

• Diversification Needs: The family office sought broad diversification, spreading risk across asset classes, but had limited in-house expertise in private equity and emerging markets.
• Return Expectations: They aimed for above-average returns without taking on high volatility or complex, illiquid structures.

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^{Fiducia Adamantina’s Approach}

^{1. Risk Profiling & Objectives Alignment}

• Conducted in-depth discussions to clarify the family’s risk tolerance, liquidity needs, and philanthropic interests.
• Established clear target return benchmarks aligned with a moderate risk tolerance, aiming for 8–12% annualized returns over a 5–7 year horizon. This phase also included mapping out liquidity requirements and specific areas of philanthropic focus to integrate values into investment decisions.

^{2. Portfolio Construction}

• Private Equity (30% Allocation): Focused on established lower-middle-market funds with proven track records in consumer staples and healthcare. These funds were selected for their strong growth potential, operational transparency, and manageable lock-up periods, ensuring a balance of returns and accessibility.
• Real Estate (20% Allocation): Recommended a carefully selected mix of commercial real estate funds specializing in stable, income-generating properties. The portfolio included multi-family housing in top-performing urban markets and logistic centers experiencing high e-commerce demand, ensuring a robust and predictable income stream.
• Fixed Income & Cash Equivalents (25% Allocation): Integrated a blend of high-grade corporate bonds, municipal bonds, and short-duration Treasuries. This allocation was designed to provide downside protection, steady income through reliable coupons, and a liquidity buffer for unexpected needs.
• Global Equities (15% Allocation): Curated a diversified basket of globally oriented index funds and select active strategies, focusing on dividend-paying stocks in both emerging and developed markets. This approach ensured growth potential while maintaining a stable income component.
• Alternatives & Impact Investing (10% Allocation): Allocated to niche areas such as sustainable agriculture and specialized hedge fund strategies that align with the family’s ESG objectives. These investments balanced moderate returns with philanthropic and environmental goals, contributing to a broader legacy impact.

^{3. Due Diligence & Manager Selection}

• Conducted comprehensive interviews with multiple fund managers, assessing their historical performance, fee structures, and risk management protocols.
• Scrutinized each manager’s investment philosophy to ensure alignment with the family’s values, specifically avoiding controversial industries and maintaining transparency throughout the process.
• Developed a robust framework to evaluate qualitative and quantitative factors, ensuring consistent alignment with the family’s long-term wealth preservation goals.

^{4. Implementation & Monitoring}

• Staggered capital commitments to private equity and real estate vehicles to avoid over-concentration and optimize entry points. This ensured that investments were made in favorable market conditions, minimizing unnecessary risks.
• Established rigorous quarterly performance reviews supported by robust reporting dashboards. These tools tracked manager performance, cash flows, and market shifts, providing stakeholders with clear insights and empowering informed decision-making.
• Maintained ongoing engagement with fund managers and market analysts to proactively adjust allocations in response to economic and market developments.

_{Results & Impact}

• Initial Return Exceeding Targets: Within the first 12 months, the portfolio generated an annualized return of 9%, surpassing comparable benchmarks and achieving the family’s financial goals for the period.
• Risk Mitigation: The well-structured diversification strategy effectively cushioned the family office from equity market downturns. Strong real estate income and stable fixed-income yields offset short-term volatility in global equities, ensuring consistent performance.
• Enhanced Governance: Transparent reporting protocols and ongoing strategic reviews empowered family stakeholders to actively participate in the decision-making process. This fostered greater unity and alignment around the family’s wealth management goals, reinforcing trust and collaboration.

_{Key Takeaways}

• Tailored Diversification: By combining growth assets such as private equity and equities with stable income vehicles like fixed income and real estate, the portfolio delivered risk-adjusted returns that aligned with the family’s conservative-to-moderate risk profile.
• Active Oversight: Regular monitoring and comprehensive manager due diligence proved essential for fine-tuning allocations, preserving capital, and achieving consistent performance in uncertain markets.
• Long-term Partnership: Ongoing collaboration between Fiducia Adamantina and the family ensured that the strategy evolved to meet shifting family dynamics, philanthropic aspirations, and changing market conditions, securing a sustainable legacy for future generations.