Family offices are preparing for the possibility of higher inflation this year, with many increasing allocations to real estate and alternative assets as protective measures, according to a new J.P. Morgan Private Bank survey.
In the report, 64% of U.S. family offices identified interest rates as one of the biggest threats to their portfolios, while 61% highlighted inflation. Globally, geopolitical instability was seen as the leading concern.
The survey included 333 single-family offices, representing ultra-wealthy families with an average net worth of $1.6 billion. David Frame, global CEO of J.P. Morgan Private Bank, said clients are most focused on inflation pressures and geopolitical uncertainty.
To hedge against inflation, many family offices are shifting further into alternatives such as private equity and hedge funds, along with greater exposure to real estate. Those who viewed inflation as a key risk reported holding roughly 60% of their portfolios in alternative investments and significantly larger allocations to property and hedge funds.
At the same time, family offices are moving quickly into artificial intelligence-related opportunities. AI remains the most popular investment theme, with 65% saying it is already part of their portfolios or a priority going forward. Other favoured areas include health care, infrastructure, and cybersecurity.
U.S. family offices continue to balance investments across public and private markets. Public equities account for about 40% of holdings, while private investments—including venture capital, private credit, private equity and real estate—make up around 34%.
Despite inflation concerns, most family offices remain cautious about gold. Nearly three-quarters reported having no exposure, and Frame noted that the recent rise in gold prices has made new investments less attractive.
The report also found that family offices still hold substantial cash reserves. Some are keeping liquidity available for opportunities in a market downturn, while others are benefiting from relatively strong yields on cash equivalents. Frame added that for those worried about inflation, holding cash can be a strategic choice, since rising inflation could push rates higher again, making patience worthwhile.
