Family Offices Are Hungry For for Direct Investments, Private Equity, per Report
Newly tracked family offices have a strong appetite for direct investments and private equity but are less interested in hedge funds and private credit, according to Fintrx’s latest Family Office Report.
The report found that direct investments were targeted by 92.7% of the 96 family offices added to the firm’s database during the second quarter, while 89.6% reported seeking private equity investments. The new interest in the asset classes was significantly higher than the level of interest reported, 80.7% and 79.1%, by family offices that were not new to the overall database of more than 4,600 that reported interest in direct investments and private equity, respectively.
The gap was even wider for private credit and hedge funds, which were attracting interest from 6.3% and 10.4% respectively among the second-quarter additions, compared with 24.1% and 38.2% respectively within the full database.
Real estate investments were also popular among the newly added family offices, with 64.6% reporting an interest in the asset class, followed by venture capital and long-only investments at 45.8% each. Meanwhile, 22.9% and 16.7% of the offices reported interest in fixed income and funds of funds investments, respectively. None of these figures differed significantly from the corresponding figures for the overall database.
The figures are based on data, including investment mandates, on the 96 family offices added to Fintrx’s database during the second quarter, which was down from 116 during the first quarter. Single-family offices accounted for 68 of the additions, with the other 28 being multifamily offices.
The report found that entrepreneurial wealth, versus generational wealth, was the dominant source of wealth among newly classified single-family offices, with 68.6% classified as entrepreneurial and 29.2% tied to generational wealth. Private investing, technology and real estate were the leading sectors associated with entrepreneurial wealth, and the majority of the new offices based on the East Coast.
“Within the U.S., the Northeast’s rise reflects family office formation tied to finance, real estate and generational wealth, while the West’s steady presence shows the ongoing concentration of entrepreneurial and technology-driven wealth,” the report stated.
Fintrx also reported that the additions had a stronger international mix, with 59.4% of them based outside the U.S., compared with 52.1% the previous quarter. North America and Europe accounted for 44.8% and 27.1% of the additions respectively, with 19.8% coming from Asia and Oceania and 8.3% from Africa/Middle East.
Among the 96 new offices, which span 25 countries, 39 were from the U.S., while six each were from Switzerland and Australia, followed by India with five, and four each from the U.K., Singapore, Hong Kong and Canada. Germany and the United Arab Emirates accounted for three each.