Family Offices Growing Appetite for Alternative Asset Investments

February 28, 2024

Recent data from Preqin shows that family offices have emerged as key players in the alternatives space, capturing the attention of fund managers and high-net-worth investors alike.

According to the latest insights from Preqin, the number of family offices has surged, more than tripling since 2019 to reach 4,592 in 2023. And more and more of them are allocating their capital to alternative investments.

Analysis shows a rising demand from affluent individuals for the specific risk-reward spread that alternative assets can bring to portfolios. The report goes on to consider the alternative asset classes that are poised to garner significant investment. 

The report details a pretty major shift, with the proportion of searches for private equity and VC strategies declining from 71.7% in 2022 to 54.8% in 2023.

Diversification in Action: Embracing New Opportunities

The report suggests that several core asset classes appear to be on a growth trajectory. 

Private debt saw an increase from 8.3% to 12.4% of fund searches, while hedge funds rose from 5% to 10.7%. 

Likewise, infrastructure and real estate showed upticks as well. The data demonstrates a growing appetite for a well-diversified approach to investments featuring a range of alternative asset types.

Global Perspectives: Embracing Alternatives Across Regions

The enthusiasm for alternative investments among family offices does not seem to be confined to a specific region. 

At the moment, 57% of family offices in North America, 69% in Europe, 74% in Asia, and 74% in other parts of the world are exposed to alternative assets.

A Bright Future: Advancing Capital Allocations

Data from KKR compounds the promising outlook highlighted by Preqin, showing that family offices are gearing up to enhance their allocations to alternative investments. 

KKR reports that the average portfolio is set to allocate 52% to alternative investments in 2024. This a noticeable increase from 42% in 2022. 

Private infrastructure has emerged as a favoured choice among Chief Investment Officers, as well as traditional asset classes like private equity and private debt. 

KKR reports that many of the family offices they surveyed are in a phase of growth, focusing on strengthening investment strategies, risk management, and product expertise.

The Evolution of Wealth Management

Ctrl Alt can help family offices to grow their clients' alternative asset allocations. We simplify the entire process of alternative asset investing via our wrapping and technology, allowing access to a whole marketplace of different alternative assets. 

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