Family offices increase alternative asset allocations as inflation, volatility reshape portfolios

Wealthy investors are increasing exposure to private markets and hedge funds as concerns about inflation, market concentration and geopolitical uncertainty reshape portfolio strategy. Alternative assets now make up 60% of single-family office portfolios, overtaking traditional holdings for the first time and highlighting a broader push for diversification rather than a retreat from public markets.

Shift toward private markets and hedge funds

As reported by CNBC, citing BNY Wealth, alternative investments now account for 60% of single-family office portfolios, compared with 41% for traditional assets. The change reflects a broader search among the world’s richest investors for income, diversification and returns less tied to listed equity markets.

Industry executives say demand is rising across hedge funds, private equity, private credit and infrastructure. JPMorgan Asset Management’s private wealth alternative assets in Asia-Pacific surge 40% over the past 12 months, according to regional chief executive officer Dan Watkins, while Lombard Odier’s Asia chief investment officer John Woods says family offices are planning sharper increases in allocations to alternatives.

Hedge funds are drawing particularly strong interest from qualified clients seeking protection from market swings and returns that are less dependent on the direction of equities, Citi Wealth’s Olaolu Aganga says. Private credit is also attracting demand because it can provide contractual income streams, while some hedge fund strategies aim to profit from relative differences between companies rather than broad market rallies.

Citi’s 2026 survey of 351 family offices shows inflation remains their biggest concern, followed by interest rates, financial system stability and market volatility. At the same time, the survey finds public equities record the strongest net increase in allocations, indicating investors are adding alternatives alongside traditional assets instead of making a wholesale rotation away from stocks and bonds.

Infrastructure and access trends reshape allocations

Infrastructure is emerging as a major beneficiary of the shift, with demand linked to artificial intelligence, electrification and energy security supporting interest in data centers, power networks and digital connectivity. UBS Unified Global Alternatives’ Thomas Roland Guyot says investors are increasingly targeting assets tied to those themes because they can offer long-term growth with relatively predictable cash flows, especially where revenues depend on essential demand or long-term contracts.

Fund flow data points in the same direction. Net inflows into open-ended infrastructure funds rise 30% year on year in the 12 months through the first quarter of 2026, according to PitchBook data cited by UBS.

Private equity remains a core holding, although wealthy investors are becoming more selective. Citi Wealth says family offices are increasingly favoring direct company investments, co-investments with private equity managers and purchases of existing fund stakes on the secondary market, approaches that can provide greater control or access to discounted assets.

The expansion of evergreen and semi-liquid funds is also helping channel more capital into alternatives by lowering minimum investment thresholds and reducing administrative hurdles. Even so, investors still face risks including long lockups, delayed valuation adjustments, withdrawal restrictions in semi-liquid vehicles and hidden concentration across themes such as artificial intelligence, where exposure can overlap across real estate, infrastructure and private equity funds.