Fund administrator says strong performance and diversification are among key benefits for private wealth investors
August 15, 2024 (Preqin News) – Family offices are increasing their exposure to alternative assets, Jersey-based fund administrator Ocorian finds in its 2024 Global Family Office report. The report is based on a survey with 309 respondents.
Private equity is the top target, with 41.1% of respondents planning to dramatically increase their allocations over the next 12 months, 33.7% planning a dramatic increase to real estate, and 32.4% and 32.7% to infrastructure and private debt, respectively.
How do you see allocations to the following asset classes change over the next 12 months?
Source: Ocorian's 2024 Global Family Office report
Alternatives’ strong performance was selected as the most important benefit the asset classes bring, followed by diversification and ‘greater transparency around alternatives.’ More than two-thirds (68.4%) of respondents expect alternative asset growth to be structured through funds, followed by GP-LP vehicles (65.5%), and special purpose vehicles (44.0%).
The vast majority (94.2%) of respondents see a natural succession of wealth and leadership within families, and over half (58.6%) think that the next generation’s approach and priorities differ slightly, with another third (34.4%) thinking they differ significantly.
The biggest difference is in the next generation’s focus on digital assets (selected by 65.5% of respondents), followed by an increased focus on private markets (46.0%) and ESG/impact investing (42.2%).
More than two-thirds of respondents (69.3%) saw a slight increase in risk appetite for the family whose wealth they manage, with the most selected reason for this being greater regulation around riskier or more specialist asset classes. Other reasons were the feeling that inflation will peak soon or has peaked, that there is greater transparency in riskier asset classes, and the feeling that markets have hit the bottom or are ready to recover.
The world has been becoming progressively richer, after rebounding from a 2022 slump, according to UBS’ Global Wealth Report 2024. The Zurich-based bank forecast that $83.5tn of wealth will be transferred between individuals within the next 20–25 years. An increase in private wealth will likely accelerate growth in private markets AUM, which had reached $15.4tn at the end of 2023, according to Preqin data.
The fall in value of both public equities and bonds against rising interest rates in 2022 laid the foundations for the denominator effect, which pushed many investors into over-allocation in private markets over the next year. Institutional investors, particularly pension plans, have been unable to commit against these constraints, and as a result, family offices have become an appealing source of capital for managers.
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.