Family offices move to ‘risk on’ with plans to load up on stocks, private credit

At a time when many investors are pulling back, family offices are moving into “risk on” mode, with plans to buy more stocks and alternative investments this year, according to a new survey.

Nearly half (48%) of family offices plan to buy stocks this year, according to Goldman 2023 Family Office Investment Insight Report. The report, based on a survey of 166 family offices around the world with at least $500 million in assets, also found that family offices plan to put their large cash piles to work as inflation, rising rates and falling stocks create new opportunities.

“Family offices, for the most part, are really risk-on for the next 12 months,” said Meena Flynn, co-head of Global Private Wealth Management at Goldman. “They can ‘zig’ while others ‘zag.’ And they really try to prepare in terms of how they allocate their assets to be able to do that.”

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Currently, the family offices surveyed had nearly half (44%) of their holdings in fixed income and alternative investments, with 26% in private equity, 9% in real-estate and infrastructure, 6% in hedge-funds 3% in private credit and 5% in commodities and other investments.

They are also holding plenty of cash to hold as dry powder for bargains as markets decline and valuations come down in commercial real-estate and private companies. The family offices surveyed have 12% of their assets in cash, slightly higher than 2021 levels. They have 28% of their holdings in publicly traded stocks, which was down from 31% in 2021 — likely due to falling stock prices.

Goldman says family offices for the most part haven’t sold their equities — but are waiting for attractive levels to use their cash to start buying more stocks this year.

“Family offices are very sophisticated in their analysis of what markets have done over time,” said…