Family offices shun stocks for private markets and alternatives
Family offices hold more of their wealth in private markets than in publicly traded stocks, and they plan to increase their allocations to the alternatives sector in the year to come.
According to a new survey of North American family offices conducted by Campden Wealth and RBC, family offices have 29.2 per cent of their investments in private markets including private equity, venture capital and private debt. By comparison, just 28.5 per cent of family office money is held in publicly traded stocks.
This is the first time in the survey’s nine-year history that private allocations have outranked public investments.
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Last year 31 per cent of family office wealth was invested in stocks and shares, while 27 per cent was invested in the private markets. The remaining assets were invested in cash, bonds, alternatives, hedge funds, commodities, real estate and other investments.
Family offices currently hold nine per cent of their wealth in cash, almost double the level of cash held in 2021. Campden Wealth and RBC said that this was a reflection of their prudent approach amid volatile and risk-averse markets.
“The key questions now revolve around how and when this capital might be reinvested,” the survey’s authors noted.
“It appears that private markets are poised to be the primary beneficiaries of this capital re-allocation. An impressive 41 per cent of family offices intend to increase their allocation to private equity funds, with 32 per cent looking to boost direct investments in private equity.
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“While a reasonable percentage of families consider divesting from these asset categories, the net result clearly positions private equity funds alongside private debt (37 per cent) as the standout winners.”
The survey found that the average North American family office is worth $1.3bn (£1.03bn). The total value of the offices surveyed is over $442bn.
Only 23 per cent of the offices surveyed said that they planned to add to their developed-market public stock portfolio, while 15 per cent intend to trim their stock holdings in the year ahead, the survey said.
Family offices also highlighted the opportunities in alternative assets such as real estate and commodities. When asked about their investment priorities for the coming year, the number one choice was to “invest in alternative asset classes.”
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