Family Offices' Asset Trends
private equity & hedge fund
Faith in illiquid assets remains strong, as two thirds of family offices believe that illiquidity boosts returns.
The decline in direct private equity allocations from 13% in 2021 to a planned 6% in 2023 should, however, be seen within the context of family offices’ plans to resume raising allocations over five years, as 41% still intend to do so. Further, the decline in direct private equity is partially offset by a rise in allocations to private equity funds / funds of funds, from 8% in 2021 to 10% in 2023. Family offices also intend to increase their allocations to private debt and infrastructure in 2023 – from 2% to 3% and 0% to 1% respectively.
real estate
“In terms of real estate, we plan to invest more but it’s hard to conclude anything at the moment because the business cases that we see do not reflect the shift in interest rates. However, I think the situation will settle in the next year or two,” noted a Danish CIO.
Naturally for a sector where location is everything, wealthy elites tend to prefer domestic real estate.
staffing costs
Family offices foresee spending on staff, their largest cost, rising over three years. However, most expect only moderate increases.
Scale reduces costs as a percentage of assets under management. Proportionately, smaller family offices have the highest costs.
The payment of bonuses varies by region. US family offices are most likely to have a bonus system in place, as well as offering co-investment opportunities and carried interest.