42 per cent of family office investment managers “strongly agree” with the statement that the industry is pivoting to alternative investments and believe this to be a long-term shift, according to recent research from Ocorian.
Around a third of participants believe that their funds will increase allocations to real estate assets by at least 50 per cent, with the same figure seen for private debt.
The study polled more than 130 family office investment managers, located across the world and holding approximately US $62.425 in assets under management.
Considering what areas are seeing the most exposure to alternative investments, more than half of respondents (54 per cent) named the EU. This was quickly followed by the UK at 53 per cent, with the Middle East and Asia and the Americas only selected by 38 and 32 per cent of participants respectively.
77 per cent of respondents reported growth of alternative allocations in funds, making them the most popular vehicle for such investments. 56 per cent saw growth in special purpose vehicles and GP/LPs.
Those polled stated that this shift is the result of strong recent performances from alternatives, as well as the diversification benefits that such investments bring and the transparency of the asset class.
The growing range of options in the sector was also cited as an appealing factor, along with the desire to invest ahead of inflation protection and generate a regular income.
Commenting on the findings, Amy Collins, head of family office at Ocorian, says: “Whilst [alternative] assets offer the potential for higher returns, they also require a higher level of expertise and specialised knowledge. Rising interest rates help to ease the urgency of finding alternatives to cash, but an issue is that people can sometimes think there is a binary choice between holding cash or going for a risky asset.
She continues: “The rise in the private capital model is changing the way investments and transactions are completed – they can use their own family office competitive advantages, which means they enact the transaction and then refinance it if they need to, and they can be much more flexible, with often just one person making the decision at the top.”
