Family offices are outpacing institutional investors when it comes to use of private markets, according to Schroders.
The firm’s Global Investor Insights surveyed nearly 1,000 institutional investors and wealth managers, including 79 in Australia.
This found 77 per cent of family offices are investing in private markets compared to 70 per cent of institutional investors with private equity being the preferred option. A third of family offices invest more than 20 per cent of their portfolios in private assets with Schroders noting these high-net-worth (HNW) families are expecting the same access as pensions and sovereign funds.
Theone Star, head of private wealth at Schroders Australia, said: “It’s clear that the needs of today’s family offices go far beyond traditional investment management. They expect exposure to both public and private markets, technology and reporting systems, and the personal touch of a trusted partner who understands generational wealth.”
Wealth managers that combine institutional expertise with relationship-driven service will set the standard for the next era of private wealth, she said.
“Family offices think in generations. The future belongs to wealth managers who share that horizon.”
In October, KPMG flagged family offices are targeting high annual returns for their clients. The majority of family offices, 61 per cent, reported targeted annual real returns on investment of between 7–11 per cent. A small 12 per cent reported targeting returns in excess of 15 per cent which KPMG noted would require “high levels of risk or leverage or both”.
The 2024 Australian Family Office Compensation Benchmark Report estimated these families account for 40 per cent of active private capital investors into private equity and credit over the last 12 months.
Commenting on the appeal of private markets, Nils Rode, chief investment officer at Schroders Capital, said it offers access to a universe of businesses inaccessible via public markets and less affected by global trade tensions.
“Private equity, and especially the small and mid-market buyouts segment, represents a particularly compelling long term return opportunity for investors in the current environment.
“These deals benefit from a favourable capital supply and dynamic to offer attractive entry points – and they offer access to a broad and deep universe of investment opportunities, often through domestically-focused companies that are less exposed to shifting global trade dynamics.”
