Family offices have emerged as key players in the alternatives space, data from Prequin has revealed.
According to the data provider’s insights, the number of family offices has surged, more than tripling since 2019 to reach 4,592 in 2023. An increasing number are allocating their capital to alternative investments, it highlighted.
Cash-rich family offices “on the acquisition trail”
The proportion of searches for private equity and venture capital strategies declined from 71.7% in 2022 to 54.8% in 2023. While core asset classes seem to be on a growth trajectory, private debt grew from 8.3% to 12.4% of fund searches, while hedge funds rose from 5% to 10.7%. Likewise, infrastructure and real estate showed upticks as well.
Data indicated a growing appetite for diversified investments including alternative assets, a trend the firm expected to spread throughout the investment space.
According to the research, the average portfolio is set to allocate 52% to alternative investments in 2024 – an increase from 42% in 2022.
Investors bank on alternatives and AI for 2024
Matt Ong, CEO and founder of Ctrl Alt, a B2B alternative asset infrastructure provider, said: “The rising demand for the specific risk-reward spread that alternative assets can bring to portfolios is a sign of things to come across the investment space. While private equity and venture capital have traditionally served as gateways to alternative investments, the challenges of 2023 prompted a pivot towards less saturated asset classes in addition.”
As family offices shift from wealth creation to retention, their strategies increasingly prioritise fostering deep relationships, he pointed out. This trend, according to Ong, is driven in part by younger generations seeking investments aligned with their interests and values, such as films and green energy projects.