Family offices are shifting away from the stock market and towards alternative investments, seeking higher returns and lower volatility, as indicated by a recent report from JPMorgan Private Bank. With 46% of their total portfolio allocated to alternatives like private equity, real estate, venture capital, hedge funds, and private credit, family offices are moving towards a more diversified investment strategy.
Unlike the unpredictable fluctuations of stock prices, alternative investments offer a more gradual change in valuation, smoothing out volatility and providing a more stable foundation for long-term wealth management. This shift represents a significant trend in the industry, with large family offices in the U.S. leading the charge by investing more than 49% in alternatives, compared to 22% in public stocks.
As family offices increasingly focus on long-term wealth preservation and growth, they are harnessing their resources to invest in private markets, venture capital, and private equity, leveraging their expertise and experience as entrepreneurs to drive the success of private companies.
Looking ahead, the report suggests a continued growth in family office investments in alternatives, particularly in private credit and digital infrastructure. With a strategic focus on long-term investment horizons and a willingness to embrace illiquidity for higher returns, family offices are poised to play a critical role in shaping the future of the investment landscape.
