Maximizing Returns: Why Family Offices Are Focusing on Stocks While Reducing Private Equity Investments

Family offices, which manage wealth for ultra-wealthy families, are shifting their investment strategies. A recent survey by Goldman Sachs shows that these offices are increasingly favoring stocks over private equity. The average allocation to public equities has risen to 31%, a 3% increase from last year. In contrast, private equity investments have dropped from 26% to 21%.

This trend is particularly strong in the U.S. and Americas, where family offices raised their stock allocations more significantly than their international counterparts. Tony Pasquariello from Goldman Sachs describes this as a “pro-risk asset mix.”

Despite concerns about geopolitical issues and inflation, which about 75% of surveyed family offices acknowledge, many are still looking to invest when they see market opportunities. Sara Naison-Tarajano, a leader at Goldman Sachs, explains that family offices often take bold steps to invest when other players retreat. This strategy aligns with general market principles: in uncertainty, savvy investors seek valuable opportunities.

A noteworthy insight from the survey is the interest in artificial intelligence (AI). A significant 86% of family offices have invested in AI, favoring public equities and exchange-traded funds (ETFs). As AI continues to grow, investing in related sectors, like data centers, is becoming increasingly popular.

Interestingly, 39% of family offices plan to increase their allocations in private equity over the next year, signaling a nuanced approach. Many still see value in this asset class, particularly in the face of economic fluctuations.

Family offices typically do not expect major changes in their portfolios in the near future. However, more plan to increase their investments rather than cut back. A third of respondents aim to deploy more capital, contrasting with only 16% who intend to increase their cash reserves.

Regional differences also play a role in investment strategies. For example, while a third of U.S. family offices do not prepare for unexpected market downturns, only 14% and 12% of European and Asia-Pacific firms take the same approach. Geographic diversification is the most favored strategy to mitigate risks.

Gold, seen as a classic hedge against instability, is still relevant. Although it makes up a small portion of many family office portfolios, some hold as much as 15%. Asian family offices are also increasingly interested in cryptocurrency, with only 26% showing no interest in it, compared to higher percentages in other regions.

Overall, the survey highlights an evolving landscape where family offices are balancing caution with opportunity, staying engaged and adaptable in uncertain times.



Source link

Breaking News: Investing,Stock markets,Family Office,United States,Goldman Sachs Group Inc,Business,Investment strategy,business news