From CNBC: 2024-04-29 11:31:17

A new study found that large family offices have almost half of their investments in private markets and alternatives, shifting away from the stock market for higher returns and lower volatility. Family offices surveyed had 46% in alternative investments, with 26% in publicly traded stocks, showing a clear shift in investment strategy.

In the U.S., large family offices over $500 million hold more than 49% in alternatives, with 22% in public stocks. Private equity makes up 19% of alternative investments, followed by real estate at 14%, venture capital at 5%, hedge funds at 5%, and private credit at 4%. Family offices are becoming significant players in private equity markets.

Family offices are focusing on long-term investments for future generations, with an average of $1.4 billion in assets. They are attracted to the stability and higher potential returns of alternatives compared to the volatility of stocks. Family offices are now deploying over $6 trillion in assets, becoming influential in private markets like private equity and venture capital.

JPMorgan Private Bank’s U.S. Family Office Practice head, William Sinclair, noted that family offices are increasingly moving towards alternatives for higher returns. Many family office founders started as entrepreneurs and now seek ownership stakes in private companies. Investments in private credit and infrastructure, particularly digital infrastructure like data centers, are expected to grow.

U.S. family offices hold an average of 9% in cash, a historic high, and 10% in bonds. Although less than half of family offices have a long-term investment return target, many use benchmarks to evaluate performance. The report highlighted that family offices, especially smaller ones, are outsourcing more functions like investment management and cybersecurity to reduce costs.



Read more at CNBC: Family offices look beyond stocks for higher return, less volatility