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BlackRock report reveals shifting investment strategies for family offices

BlackRock’s Global Family Office Report, titled “Seizing opportunities in times of change,” presents insights from a study of 120 single family offices with a total AUM of $243 billion. The report reveals that compared to the previous study, a significantly higher percentage of respondents (46%) plan to make changes to their investment strategy or portfolio.  

BlackRock’s Global Family Office Report, titled “Seizing opportunities in times of change,” presents insights from a study of 120 single family offices with a total AUM of $243 billion. The report reveals that compared to the previous study, a significantly higher percentage of respondents (46%) plan to make changes to their investment strategy or portfolio. 

These changes are motivated by factors such as increased volatility, inflation, interest rates, and geopolitical tensions. Family offices are adjusting their portfolios by rebalancing away from illiquid assets and seeking opportunities in public markets, while others are focusing on private assets for generating returns. 

The report highlights several key trends. Firstly, higher rates have brought fundamental changes to fixed income and cash markets. Geopolitical volatility and supply chain constraints have prompted investors to reassess their geographic exposures. Additionally, a growth slowdown and higher market volatility have led to a re-evaluation of growth exposure across public and private markets. 

Family offices are actively pursuing tactical opportunities to capture alpha in an evolving market landscape, leading to more frequent portfolio reviews and seeking external input. While high-return alternative investments remain a focus, family offices are also looking to diversify their allocations in private markets. They are seeking external resources to unlock opportunities and maximize returns. 

Despite the sharp fall in public markets in 2022, family offices continue to exhibit a strong preference for private markets, intending to maintain or increase and diversify their allocations. Performance of alternative allocations in 2022 was generally viewed positively, except for hedge funds, which underperformed for a significant portion of respondents. 

The report suggests that private markets will remain crucial during the current business cycle, with a shift in emphasis on different themes. Infrastructure emerges as a particular area of focus, with a significant percentage of respondents (42%) intending to increase their allocations. This is followed by private credit, private equity direct deals, private equity funds, and real estate. 

Given the premium that liquidity is expected to command in private equity and private credit markets, family offices are actively seeking opportunities to deploy their large capital pools in areas that offer compelling yield profiles. 

Read more: https://institutionalassetmanager.co.uk/blackrock-report-finds-change-afoot-for-family-offices/ 

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