A recent Preqin report shows a 21% increase in family offices last year, reaching 4,592 globally, tripling since 2019. North America, with 1,682 offices, leads in both numbers and asset concentration, housing over half of all family office assets worldwide. This growth highlights the sector’s impressive expansion, with private equity firms keenly targeting this previously overlooked segment of wealth management.
Family offices, managing the private investments of wealthy individuals and families, have thrived due to rising personal fortunes and the increase of high-net-worth individuals (HNWIs). Forbes labeled 2024 a record year for billionaires, counting 2,781 with a collective worth of $14.2 trillion. Family offices now manage an estimated $6 trillion in assets, driven by the need for succession planning and wealth transfer to the next generation.
Investment preferences of family offices are shifting towards alternative assets like private equity, venture capital, hedge funds, infrastructure, and real estate. Preqin notes that family offices have the highest hedge fund allocations among institutional investors. J.P. Morgan’s 2024 Global Family Office Report states that 45% of family office portfolios are allocated to alternative assets.
Private equity has become the top investment class for family offices, surpassing public equity. Deloitte’s 2024 Family Office Insights report shows private equity making up 30% of family office portfolios, up from 22% in 2021. Major investment managers like Blackstone, KKR, and Carlyle are increasingly targeting family offices.
KKR, for instance, raised $75 billion from non-institutional private wealth, while BNY Mellon reports that 62% of family offices made at least six direct private company investments in the past year. Despite some alternative asset classes peaking in interest, demand for private debt and private-equity secondaries remains high due to their long-term potential.
Family offices also explore short-term opportunities like cryptocurrencies, with a 5% allocation noted in BNY Mellon’s report. However, 38% of surveyed family offices avoid crypto due to volatility and regulatory concerns.
Looking ahead, Deloitte reports that 70% of family offices expect asset growth in 2024, with 79% anticipating increased family wealth. These offices, accustomed to economic fluctuations, are positioned to capitalize on long-term and opportunistic investments, maintaining their robust growth trajectory.
