Evolution of Family Offices...Future of ‘Femtech'...ESG and E-Commerce

[Goldman Sachs]( [BRIEFINGS] July 23, 2021 Family Offices Look Far and Wide for Higher Returns Family offices are acting more and more like traditional institutional investors but using their unique structure to differentiate themselves, according to a new Goldman Sachs report, [Widening the Aperture: Family Office Investment Insights](. The report, which draws on a cross-divisional survey of more than 150 Goldman Sachs clients around the world, suggests family offices are aggressively seeking returns and have an outsized exposure to alternative investments, whether investing directly or through managers. In fact, many have a “barbell” approach to investing in which they hold high cash balances to complement the higher allocations to illiquid and alternative investments. And because family offices don’t have defined investment timelines—given that their mission is to grow and preserve wealth across multiple generations—it’s easier for them to take a long-term mindset. Interestingly, families are positioning for a prolonged low interest rate environment or an inflationary one by more heavily weighting similar asset classes. Environmental, social and governance factors are also top of mind, with a majority of respondents looking for ways to incorporate them into their philanthropic efforts, workplace policies and investing strategy. [Read report]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Family%20Offices%20Widen%20Their%20Investment%20Focus&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fpages%2Fwidening-the-aperture-family-office-investments-insights-f%2Freport.pdf) Why ‘Femtech’ Is Taking Off Above (L to R): Ann Roberts of Flo Health, Dr. Peter Kecskemethy of Kheiron Medical, Lea von Bidder of Ava and Antonia Riera of Goldman Sachs First, there was “fintech,” and now there’s “femtech.” In an episode of Exchanges at Goldman Sachs, three leading voices in the industry—Ann Roberts of Flo Health, Dr. Peter Kecskemethy of Kheiron Medical and Lea von Bidder of Ava—joined Goldman Sachs’ Antonia Riera and host Allison Nathan to discuss the recent growth of tech companies focused on women’s healthcare. “To me, femtech refers to technology, the tech being developed in service of women's health, from periods to pregnancy to menopause,” says Ann Roberts, chief people officer of Flo Health, an AI-driven women's health app. “So we, at Flo Health, are…providing evidence-based, science-backed information and functionality in an engaging way to educate and empower women...to take control of their health.” One example of innovation in the space: Femtech firms are currently developing new ways to measure fertility. “There [are] actually multiple things such as heart rate, heart rate durability, profusion” that you can track, says Lea von Bidder, co-founder and CEO of Ava. “They are all changing throughout the menstrual cycle. So what we're doing now is we're measuring around a million of those data points a night…to detect a firm window of [women's fertility] in real time and help them really optimize their chances of conceiving.” [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Future%20of%20%E2%80%98Femtech%E2%80%99&body=https%3A%2F%2Fyoutu.be%2FmDpl6hm-2SM) ESG and E-Commerce “Whenever you’ve got something growing so fast as a portion of the economy and touching so many elements of our lives, you’re going to run up against ESG issues,” says Goldman Sachs Research’s Derek Bingham of e-commerce’s rapidly expanding footprint, the subject of his recent report (and the focus of a recent episode of The Daily Check-In). Three ESG issues sit at the forefront for the industry—transport-related carbon emissions, packaging and labor—the first being an area where Bingham says e-commerce doesn’t get enough credit. “The best study that we found estimates that the carbon footprint from the typical e-commerce delivery only has about half the footprint of the traditional retail shopping trip. And the big delta is transport. Instead of a traditional shopper making a full round trip to just one or two stores, a delivery truck might have 100 packages on it on a route that is optimized to minimize distance and time.” Packaging is the single-biggest offset to this carbon advantage, but Bingham notes e-commerce companies are pursuing innovative solutions that span from bioplastics to bag buyback schemes. “A lot of that is still what we would call pilots or experimentation. But that's where we have to start.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20ESG%20Case%20for%20E-Commerce&body=https%3A%2F%2Fyoutu.be%2FCRoRyunOD7E) Bumble's CEO on Dating During a Pandemic Above (L to R): Kim Posnett of Goldman Sachs and Whitney Wolfe Herd of Bumble When COVID-19 hit—along with stay-at-home orders, curfews and quarantines—the future of dating app Bumble seemed suddenly in doubt. “I'll never forget that March thinking to myself, ‘what is going to happen to this business?’” says Bumble CEO Whitney Wolfe Herd in a recent episode of Talks at GS. “But luckily, we had taken a pre-COVID bet…that video dating was part of the future.” And it paid off—video chats became a big part of Bumble’s business. “I think the one fundamental truth that we can all walk out of COVID with is that we, as humans around the globe, no matter what pandemic or what lockdown or what end-of-the-world scenario, we have to still find connection,” says Wolfe Herd. “And that is what our business serves. And the fact that we were able to innovate and be prepared for something no one could be prepared for with this video option, it really just sent us into a whole new orbit of success.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=How%20Bumble%20Is%20Redefining%20Online%20Dating%20During%20a%20Pandemic&body=https%3A%2F%2Fyoutu.be%2FWB9_vOSQ47g) Briefly…on Why Stock Picking Is Now More Important With economic growth expected to moderate amid signs of tighter monetary policy, how should investors adjust their asset allocation strategies? We sat down with Goldman Sachs Research’s Christian Mueller-Glissmann, who leads asset allocation research efforts within portfolio strategy, to discuss his outlook for economic growth in the second half of 2021, the impact across asset classes and the implications for investors. Christian, how do you expect riskier assets to move in this changing environment? Christian Mueller-Glissmann: While the macroeconomic backdrop has become less supportive, we remain broadly pro-risk in our asset allocation. We are overweight equities over both a three- and a 12-month horizon, but we’ve turned more selective, focusing either on underperforming pockets of the market or on areas that benefit from structural trends. For instance, we’d highlight defensive growth stocks such as healthcare and see potential for select value areas like commodities sectors to outperform growth again in the second half of the year. Beyond that, however, stock picking will likely become more important across the board. We continue to prefer non-U.S. to U.S. equities as they will likely benefit from delayed post-pandemic recoveries and U.S. earnings could face headwinds from increased taxes next year. You and your team also developed a Risk Appetite Indicator, which aims to track the level of global market risk appetite and risk aversion based on various market variables. What is it telling you about how investors perceive this next phase of the cycle? Christian Mueller-Glissmann: Our Risk Appetite Indicator revealed that risk appetite has been falling since the first quarter of this year, and it has recently dropped further as investor optimism about growth has waned. Historically, such a moderation in risk appetite has coincided with positive, though lower, returns from risky assets. After the strong equity rally of the past year, the next phase of this cycle will likely bring more range-bound returns that are less supported by rising valuations. As a result, we think carry—the income or regular return obtained from holding an asset—is likely to become a more important driver of portfolio performance relative to capital gains. Tell us more about your outlook for other asset classes. Christian Mueller-Glissmann: We are still bullish on commodities over a three- and 12-month horizon despite the pullback in the second quarter, as physical demand has mostly remained above supply across the board. We remain neutral on credit over both horizons—with very tight credit spreads and all-time lows for yields in most markets, we see better opportunities to generate income elsewhere. We are also underweight bonds over both horizons. After the bond rally, we think we could see higher yields into year-end. In the case of a larger “risk-off” move in markets, bonds are unlikely to protect portfolios much. Meanwhile, uncertainty surrounding central bank policy remains high. Amid the continued reopening of economies, inflation has surprised to the upside. And supply chain disruptions, a booming housing market and labor shortages could keep inflation at an elevated level. What else should investors look out for in the months ahead? Christian Mueller-Glissmann: In hindsight, investors may have been too optimistic about inflation across asset classes, but we think it’s too early to dismiss the potential for higher inflation in the coming cycle. With that in mind, we still see value in selective strategies to protect portfolios from inflation risks in the medium term. While overall volatility has declined due to the strong macroeconomic backdrop into the second half, the near-term risk of growth and rate shocks to the market—which could come from renewed COVID-related disruptions or hawkish central bank surprises—remains. This goes back to our stance that it’s crucial to be selective about adding risk to portfolios. [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly%E2%80%A6on%20the%20Outlook%20for%20Asset%20Allocation%20Strategies%20in%202021&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights Bloomberg - July 21 [Goldman Sachs' Flynn on Family Office Long-Term Investing Approach]( (6:12) Bloomberg - July 19 [Goldman's Feldgoise on Returning to the Office, M&A, SPACs]( (8:24) Bloomberg - July 19 [Goldman’s Kostin Sees U.S. Growth Decelerating, Likes Big Tech]( (7:49) [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. Goldman Sachs believes the data in this newsletter is accurate, but does not verify its accuracy independently and does not warrant or guarantee that it is accurate or complete. 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