Family Offices Recalibrate Portfolios, Embrace Private Markets
Family offices are rapidly recalibrating their investment strategies to navigate a world defined by heightened geopolitical volatility, inflation uncertainty, and structurally evolving risk. According to BlackRock’s new survey of 175 single-family offices managing over $320 billion in assets, 82% now cite geopolitical instability as their top concern—marking a shift from macroeconomic factors like inflation or interest rates that typically dominated prior cycles.
This uncertainty is driving a deeper focus on portfolio resilience, with 68% of respondents prioritizing diversification and liquidity, and 47% actively reallocating capital toward nontraditional assets such as ex-U.S. equities, liquid and illiquid alternatives, and elevated cash positions. Family offices appear to be taking a strategic pause—not retreating from risk altogether, but reframing it through a lens of idiosyncratic opportunity, particularly in private markets.
“With 60% of family offices pessimistic about the global outlook, confidence has been further shaken by new U.S. tariffs. Family offices are now prioritizing diversification, liquidity, and structural reassessment of risk as they build resilience in their investment portfolios,” Armando Senra, head of the Americas institutional business for BlackRock, said.
Private Credit and Infrastructure Take Center Stage
The structural shift into alternatives is continuing to accelerate, with alternatives now comprising 42% of average family office portfolios, up from 39% in BlackRock’s prior 2022–2023 survey. Private credit is emerging as the most favored subsegment, with 32% of respondents planning to increase allocations in the next two years. Opportunistic and special situations strategies are leading the charge, suggesting that family offices are not just chasing yield, but also positioning for dislocations and complexity premiums across the capital stack.
Infrastructure is another bright spot, with 75% of family offices viewing the asset class positively. Of those, more than half plan to raise exposure to opportunistic and value-add infrastructure strategies. This trend reflects a broader recognition that infrastructure offers not only inflation-linked cash flows and diversification, but also direct alignment with structural themes like decarbonization, digitization, and reshoring.
“Access to opportunities and the right strategies continue to rise in importance as these asset classes evolve from niche strategies to the cornerstone of client portfolios,” Lili Forouraghi, head of family office, health care, endowment and foundations for BlackRock in the U.S., said.
From Risk Avoidance to Risk Reframing
This strategic pivot reinforces a broader investment narrative: family offices aren’t merely reacting defensively—they’re seeking asymmetric returns in a world where traditional diversification alone no longer suffices. Liquidity and flexibility are being redefined, not just through core/satellite allocations, but through allocations that enable tactical shifts across public and private markets, and across regions. The pursuit of alpha is moving closer to underwriting idiosyncratic deal risk, rather than chasing market beta.
As alternatives mature from satellite allocations to core exposures, the challenge becomes operational—especially in private markets. BlackRock’s report underscores that over half of family offices identify gaps in internal capabilities around deal sourcing (63%), reporting (57%), and analytics (75%). This has led to greater adoption of OCIO services, or collaboration with third-party experts. The infrastructure of investing—process, data, talent—is now as important as investment selection itself.
“As family offices navigate increasing complexity across investment strategies, risk management and private markets, they are turning to select partners who can deliver more than just products,” Mireille Abujawdeh, head of family offices, endowments, and foundations for BlackRock in EMEA, said. “They need tailored solutions, data driven insights, deal sourcing and due diligence support, particularly in private markets where over half of respondents recognise gaps in internal expertise.”
The AI Adoption Gap
Despite enthusiasm around AI, actual deployment remains limited. While 45% of family offices are investing in companies building AI solutions and 51% are seeking exposure to AI beneficiaries, only 33% are actively incorporating AI into their own investment processes. This signals a gap between interest and implementation—driven not by a lack of conviction, but by barriers in internal readiness, data infrastructure, and domain expertise.
In the near term, AI may remain more of an investment theme than an operational tool. But that gap is likely to close quickly. As AI capabilities improve and early adopters demonstrate measurable gains in areas like risk modeling and cash-flow forecasting, broader adoption could accelerate—especially among family offices that lean on external CIO partners with the scale and technical capacity to integrate next-gen tools.
Bottom Line for CIOs and Strategists
Family offices are undergoing a structural transformation—not just in asset allocation, but in how they define and manage risk. The shift toward private credit, infrastructure, and alternatives more broadly is not a tactical response to volatility but a long-term repositioning toward differentiated, complexity-driven alpha. For institutional managers and asset owners, this reinforces the need to provide tailored, transparent, and tech-enabled solutions that meet both the sophistication and operational realities of this growing investor segment.