Family Offices Increase Risk Appetite — Evening Brief – 11.22.24
Family offices have gained increased confidence in engaging in riskier investment strategies given the enhanced regulation of assets such as alternatives, according to research from financial services company Ocorian.
Approximately 82% of family office professionals anticipate that their firm’s appetite for investment risk will increase, with 12% predicting a dramatic increase, research revealed. Approximately 62% of those who stated that their investment risk appetite will increase cited increased regulation of ‘riskier assets’ as the primary reason for their greater risk tolerance.
Additionally, family office investors reported an increase in their allocations to alternative investments. Survey respondents unanimously (99%) stated that the trend of family offices increasing their investments in alternative asset classes is a long-term one.
“The long-term trend of family offices increasing their exposure to alternative asset classes is certainly a factor in the growing appetite for risk and it is clear that improvements in regulation around riskier assets are proving popular with family offices,” said Annerien Hurter, global head of private client at Ocorian.
Infrastructure and private debt are two sectors where some family offices anticipate significant allocation increases, with 26% of survey respondents estimating that allocations to infrastructure could increase by 50%, while 23% of respondents foresee a similar increase in allocations to private debt.
Furthermore, 55% of family office respondents indicated that inflation has reached or will soon reach its peak, while over half of those surveyed (51%) asserted that family offices in the Middle East will experience the most significant rise in exposure to alternative investments. Approximately 47% of respondents anticipating a rise in investment risk appetite also foresee enhanced transparency regarding alternative investments.
“Regulation is playing an increasingly critical role in shaping the investment strategies of family offices,” said Mark Spiers, a partner in Ocorian consultancy Bovill Newgate. “Improvements in the regulatory landscape, particularly around riskier assets, are enabling family offices to explore new opportunities while still ensuring robust governance frameworks.”
Ocorian and research firm Pure Profile surveyed over 300 family offices with a combined $155 billion in assets under management in July 2024.