Assessing their asset allocation in the autumn is often important for investors as they look ahead to the final quarter and the next year. Our US correspondent looks at what the Wall Street firm makes of family offices’ investment positions.
For all the industry news about rapidly expanding multi-family
offices, the enormous investing power of institutional-strength
single family offices that avoid the limelight is often
overlooked.
“These investors have a growing influence on capital markets, and
their influence continues to grow,” said Meena Lakdawala Flynn,
co-head of Global Private Wealth Management for Goldman Sachs and
co-author of Family Office
Investment Insights, a survey of 245 family offices
worldwide.
Two-thirds of those single family offices reported a total net
worth of at least $1 billion, while one quarter had more than $5
billion. Their average annual return target, Flynn said, is 10
per cent.
So where are these powerful, long-term, multi-generational
investors putting their money now? What do they see on the
horizon, and what worries them?
Worried but
resolute
Given today’s headlines, it is hardly surprising that respondents
cited geopolitical conflict as the greatest investment risk they
face, followed by political instability, economic recession, and
global tariffs exceeding market expectations.
“Escalating international tensions, policy shifts and the looming
threat of trade wars are all shaping family office sentiment,”
the report said.
Despite these concerns, these ultra-wealthy investors remain
“overwhelmingly risk-on,” according to Sara Naison-Tarajano,
global head of Goldman Sachs Apex & Private Wealth Management
Capital Markets and co-author of the report.
“The broad takeaway [from the survey] is how little asset
allocation has changed for most institutional family offices,”
she said. “Family offices realise the importance of staying
invested, and they’re not letting fears get in the way.”
Allocations
Asset allocation to public equities (31 per cent), alternatives
(42 per cent), fixed income (11 per cent) and cash (12 per cent)
remained nearly identical to the 2023 Goldman family office
survey.
The largest change came in private equity, where exposure
declined as limited partners hesitated to recommit to new
vintages or managers. However, the report noted that the trend is
already reversing amid stronger IPO and M&A activity.
Private credit emerged as a key growth area. The proportion of
family offices without exposure fell to 26 per cent from 36 per
cent in 2023, as investors sought to benefit from higher rates
and downside protection.
Looking ahead, one-third of surveyed family offices plan to
reduce their allocation to cash and cash equivalents, while
nearly 40 per cent expect to increase their exposure to public
equities and private equity.
“Growth equity is a particular area of opportunity for family
offices,” the report stated, “as the demand for capital exceeds
supply.”
Emerging investment
themes
Most large family offices are already invested in artificial
intelligence. Half reported using AI in investment processes, and
58 per cent expect their portfolios to overweight technology more
broadly within the next 12 months.
Sports and healthcare are also gaining momentum. One quarter of
family offices are already invested in sports, and another 25 per
cent said they are interested in leagues, teams, events, or
related companies. The sector’s diverse revenue streams, long
duration, and relative resilience make it attractive, Flynn said.
Family offices are also beginning to overweight healthcare, drawn
to the ability of new companies to disrupt the market and
consumers’ shift from reactive to proactive care.
Interest in crypto
rising
Digital assets remain a niche but growing theme. One-third of
respondents are currently invested in cryptocurrency, but
interest in future investment nearly doubled year-over-year, from
12 per cent to 23 per cent.
Family offices in the Asia-Pacific region expressed the greatest
enthusiasm, with three-quarters either invested or interested in
digital assets. Asia-Pacific respondents made up 27 per cent of
the survey, Europe/Middle East/Africa accounted for 26 per cent,
and North American family offices represented the balance.
