Family offices, which manage money for the ultra-rich, are getting ready to unleash a stockpile of cash into public and private markets, according to a recent report by Goldman Sachs. Nearly half (48%) of family offices plan to buy stocks this year, according to the 2023 Family Office Investment Insight Report. This is a significant increase from last year's report, which showed only 37% of family offices planned to invest in equities.
Interest from the wealthiest families in Bitcoin and other digital currencies has shifted noticeably, according to Goldman Sachs. The report notes that while many family offices are still cautious about cryptocurrencies, a growing number are exploring the space and seeking advice on how to invest. This trend is expected to continue as more institutional investors enter the market.
The number of family offices involved in impact investing is also growing. Impact investing involves investing in companies or projects with the goal of generating positive social or environmental impact alongside financial returns. The Goldman Sachs report found that 28% of family offices are currently engaged in impact investing, up from 20% in 2022.
As family offices continue to grow and want to invest more this year, Goldman Sachs is positioning itself to help with their planned investments. The bank is expanding its services to include more private market investments, such as private equity and real estate. It is also increasing its offerings in sustainable and impact investing.
UHNI (ultra-high net worth individual) investors are increasingly interested in high-yield opportunities that provide inflation protection, particularly in the debt space. This trend is expected to continue as interest rates remain low and inflation concerns persist. Family offices are likely to follow this trend and seek out similar investment opportunities.
Goldman Sachs recently announced the launch of the 2023 Family Office Investment Insight Report, which provides a comprehensive overview of family office investment trends, strategies, and outlook for the year ahead. The report is based on a survey of 150 family offices with an average net worth of $1.6 billion.
As assets grow at family offices, so too has the investors' presence in M&A (mergers and acquisitions) — but it's not always easy. Family offices often face unique challenges when it comes to M&A, such as managing the interests of multiple family members and navigating complex legal and tax structures. However, the rewards can be significant if done successfully.
A survey of how family offices invest shows their enthusiasm for alternative investments – chiming with results of other studies of the asset class. The survey also found that the most popular alternative investments were private equity, followed by hedge funds, real estate, and commodities.
In conclusion, family offices are poised to invest in both public and private markets this year, with a particular interest in equities, impact investing, and high-yield opportunities in the debt space. As the number of family offices grows and assets under management increase, banks like Goldman Sachs are expanding their services to meet the needs of these clients. The trend towards alternative investments is also expected to continue, with private equity and real estate remaining popular choices. However, family offices face unique challenges when it comes to investing, such as managing the interests of multiple family members and navigating complex legal and tax structures. As such, it is important for family offices to work with trusted advisors who can help them navigate these challenges and make informed investment decisions.
