Family offices are poised to take on more investment risk in the coming year, driven primarily by improved regulation around riskier assets, according to new research by Ocorian, a global provider of services in corporate and fiduciary services, fund administration and capital markets to high-net-worth individuals and family offices, financial institutions, asset managers and corporates.
The study surveyed over 300 family office professionals managing $155 billion in assets globally and revealed that 82% expect their organisations’ risk appetite to increase, with 12% anticipating a dramatic rise.
The primary driver for this shift is enhanced regulation, cited by 62% of respondents as boosting confidence in riskier investments. Other factors include optimism that inflation has peaked (55%), greater transparency in riskier assets (47%), and expectations of market recovery (44%).
Alternative assets are at the heart of this trend, with 99% of respondents agreeing that family offices’ move into alternatives is a long-term strategy. Infrastructure and private debt are expected to see the biggest growth in allocations over the next two years, with 26% forecasting a 50% or greater increase in infrastructure investments and 23% predicting similar growth in private debt.
Family offices increase exposure to alts
The Middle East is emerging as a leader in the shift toward alternatives, with 51% of respondents identifying the region as likely to see the highest rise in exposure, followed by the EU (40%) and the UK (38%). When it comes to investment structures, funds remain the most popular choice (68%), followed by general partner-limited partner arrangements (66%) and Special Purpose Vehicles (SPVs) (44%).
Annerien Hurter, global head of private client at Ocorian, said: “Family offices’ appetite for risk is increasing rapidly after years of caution and cash-focused strategies. 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 is proving popular with family offices. It remains essential for advisors and service providers alike to deeply understand the unique risk appetite and governance needs of each family, ensuring transparency and trust in every decision.”
Mark Spiers, partner at Bovill Newgate, Ocorian’s global regulatory and compliance business to address growing concerns over regulatory risks across financial services, echoed this sentiment, added: “As regulatory oversight continues to evolve, it’s essential that family offices work closely with their advisors to navigate this complex environment and ensure that all investment decisions are aligned with both their long-term objectives and regulatory obligations.”
