Family offices are reshaping portfolios amid shifting UHNW priorities

Single family offices are evolving rapidly as ultra-wealthy investors demand a broader portfolio mix amid market volatility and economic uncertainty.

New insights from BNY Wealth includes a survey of 282 of the world’s largest SFOs and reveals a sharp pivot toward private markets with 69% of firms managing $1B+ planning to increase allocations to private equity funds this year and overall, a 34% rise in professionals planning to increase allocations to private equity over the past 12 months.

Meanwhile, public equities have slipped back in favor as investors look to capitalize on private market innovation and hedge against inflated valuations.

Although interest in private markets includes private equity, there is a wider focus such as direct investing, with two-thirds of family offices expecting to make six or more deals in the year ahead.

 Co-investments are on the rise too, driven by a lack of internal resources and a desire for greater transparency and control. But understaffing is an emerging obstacle, especially in the US, driving interest in external expertise.

Crypto, once a fringe asset, is now firmly on the radar with 74% of SFO professionals saying they have invested in or are exploring digital assets, an increase of 21 percentage points year-over-year. Notably, 86% of $1B+ SFOs are more likely to consider crypto since the US presidential election.

The report also found that a third of investors are turning to uncorrelated assets such as art, watches and sports teams, with these luxury assets gaining popularity as inflation hedges and sources of unique yield.

Recent changes, such as US sports leagues lifting restrictions on private equity investment, are opening new doors in media rights and live entertainment ecosystems. But AI is the standout theme for the next five years and not just an investment focus; it’s also reshaping how family offices operate, from data analytics to risk management.

Risk remains front of mind with inflation the leading concern ahead of geopolitics and cybersecurity. As a result, there’s renewed interest in real estate and hard assets, alongside tax-managed equity strategies with US SFOs paying closer attention to tax efficiency amid shifting policy landscapes.

Expanding investment offerings leads the agenda for SFOs – including crypto and alternatives - followed by talent acquisition and retention.

But the overall tone is optimistic as SFOs reinvent themselves to meet evolving needs of the wealthy individuals and families they serve.

Private capital, digital innovation and diversification beyond traditional markets are rewriting the playbook for family office portfolios and likely offer a glimpse into broader high-net-worth strategies to come.