More than half of single-family offices invest in private equity and the majority of those expect to increase their allocations over the next two years, according to a survey.
The secretive firms, which handle the daily and financial affairs of the world’s richest families, typically had at least 10 percent of their portfolios in the asset class, iCapital Network said in a report to be released today. A fifth of the families surveyed globally had 20 percent or more, the online marketplace for private equity funds found.
Families are being driven to the asset class by low-interest rates and because of the expectation of higher returns in exchange for locking up their money for several years. The investments span equity stakes in startups to financing for closely held businesses.
“Some family offices have a clear mandate of wealth preservation but they can’t do that with just investments in Treasuries,” said Michael Sonnenfeldt, chairman of the New York-based investing network Tiger 21. “Any type of prudent wealth preservation requires taking risks. They have to reach somewhere for yield and return.”
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