Family Offices Shift Focus to Private Equity and Impactful Investments
- Benjamin Radomski
- Jul 22, 2025
- 3 min read
In recent years, family offices have shifted away from traditional low-yield assets like bonds and fixed income, turning instead to private equity and venture capital deals. Today, private equity accounts for over 20% of total allocations, with nearly 80% of family offices invested in it.
Many are drawn to the potential for higher returns, direct involvement in business strategy, and greater privacy. Venture capital is also gaining traction, with family offices supporting start-ups not only financially but also strategically.
Technology is now the top sector for investment, with growing interest in blockchain, crypto, and AI. This shift is further fueled by next-gen leaders and a rising focus on sustainability. About half of family offices now invest with a purpose, favouring sectors like education, healthcare, and climate.
As complexity grows, many are adopting advanced tech tools—like AI-powered dashboards—to improve performance tracking and decision-making across diversified portfolios.
Private Markets: Alternative assets now constitute 42% of family office portfolios, up from 39%.
Private Credit and Infrastructure: These are the most favored alternative assets for future. Nearly one-third (32%) of family offices intend to increase their allocations to private credit in 2025-, with a clear preference for "special situations/opportunistic" and "direct lending" strategies. Three-quarters (75%) have a positive outlook on infrastructure's prospects, attracted by its ability to generate stable cash flows, portfolio diversification, and perceived resilience.
Private Equity and Venture Capital: Half of family offices plan to engage in "direct deals" over the next two years. Venture investments are gaining popularity due to their potential for stronger returns, despite higher risk.
Real Estate: Real estate investing is receiving renewed interest from family offices, particularly in the multifamily and industrial subsectors. It represents an average of 14.4% of assets under management for family offices.
Public Equities and Fixed Income: Traditional asset classes constitute 69% of Southern Asian family office portfolios (31% in equities, 27% in fixed income). There is a trend of moving away from low-yielding fixed income investments. Over a quarter (26%) are using high-quality, short-duration fixed income for portfolio diversification.
Emerging Asset Classes (AI and Cryptocurrencies): 53% of family offices have built portfolio exposure to Generative AI through public equities, private equity funds, or direct private equity. 33% of family office professionals are actively investing in cryptocurrencies and considering increasing their holdings.
Impact Investing and ESG: 54% of US family offices are now engaged in impact investing, double the participation seen in 2015. ESG (Environmental, Social, and Governance) factors are becoming integral to the investment decision-making process. Key sectors for impact investing include healthcare, education, and renewable energy.
Strategies for 2026
Family offices are adopting a more sophisticated approach to address future challenges.
Risk Management and Diversification: Current geopolitical uncertainty is the most important issue for 84% of family offices. They are prioritizing diversification, liquidity, and structural reassessment of risk. More than two-thirds (68%) are focused on increasing diversification. 40% are relying more on manager selection or active management to enhance portfolio diversification.
Fiscal Policy and Regulatory Changes: The expiration of several major provisions of the Tax Cuts and Jobs Act (TCJA) after 2025 could significantly reduce the estate and gift tax exclusion limit to around $7 million per individual in 2026. Professional valuations of assets before the end of 2025 are crucial to leverage the current higher exemption through strategic gifting. New legislation retains a 100% exclusion for five-year Qualified Small Business Stock (QSBS) holdings, with partial exclusions for shorter holding periods.
Collaboration and External Partnerships: More than half of family offices noted gaps in their internal expertise regarding reporting (57%), deal-sourcing (63%), and private-market analytics (75%). Approximately one-quarter (22%) have either used an Outsourced Chief Investment Officer (OCIO) or would consider doing so.
Technology Adoption: There is a predicted "widespread embrace of operations-based digital technology" (33%) within family offices. Family offices are investing in "fam-tech" platforms for real-time performance dashboards, enhancing decision-making and risk assessment.
Regional Investment Preferences
The United States accounts for 47% of all family office deals, followed by Europe with 32%. 56% of family office portfolios are allocated to North America, 21% to Asia-Pacific (excluding Greater China), and 12% to Western Europe. 33% plan to increase their exposure to Greater China over the next 12 months, and 28% plan to increase exposure to India and Taiwan, respectively.
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