Geopolitical shocks have pushed family offices to rethink nearly every corner of their portfolios. Infrastructure has emerged as the asset class they trust most right now.
Key Takeaways:
- Private equity draws the most capital, but venture bets are being cut hard.
- Infrastructure has become family offices' top investment priority worldwide.
- Japan and Northern Europe are gaining ground as riskier regions lose favor.
Family offices citing geopolitical upheavals as their top concern jumped to 88% in the latest survey, up from 65% a year earlier. The finding is from a July Roland Berger Family Office Study. Interest rate anxiety, once the dominant worry, eased to 68% from 78%. Many offices appear to have adjusted to a higher-rate environment.
For financial advisors, the shift offers a useful window. It shows how sophisticated capital is responding to the same headlines their clients read every morning. The study surveyed 88 family office executives and associated professionals, most of them based in Germany, Switzerland and Austria. That sample offers a detailed look at how European wealth managers are reallocating single- and multi-family office portfolios.
Several of the same categories are already available to advisors, including listed private equity, infrastructure and currency-hedged Japan equities. All three trade as ETFs, without the lockups that come with direct family office deals.
Private Equity and Infrastructure Lead the Rotation
Private equity remains the biggest draw among all asset classes tracked in the study. Fifty-five percent of family offices already holding private equity fund positions plan to increase them. The prior period's figure was 48%, the study found.
Among family offices with existing direct exposure, 50% plan to add to it. The prior survey put that figure at 57%, researchers noted.
Venture capital tells the opposite story. Just 19% of family offices plan to raise venture exposure, while 35% intend to cut it. The report linked the pattern to rising risk aversion toward early-stage bets.
Advisors have a liquid entry point into that same corner of the market. The Invesco Global Listed Private Equity ETF (PSP) holds publicly traded private equity firms and business development companies. It gives investors daily liquidity in a strategy family offices are already embracing directly.
Infrastructure, meanwhile, has overtaken every other sector on the priority list. Sixty-nine percent of family offices plan to add exposure, up from 41% a year earlier, according to the study. Stable, inflation-linked returns are behind the shift.
That kind of demand does not require a private placement. The Global X U.S. Infrastructure Development ETF (PAVE) tracks U.S.-listed construction, engineering and heavy equipment companies. It gives advisors a liquid way to lean into the same infrastructure theme driving family office allocations.
Healthcare Holds Steady as AI Gains Ground
Healthcare has kept its place as a defensive anchor even as other allocations shift. Fifty-eight percent of family offices still call the sector relevant to their investment focus. That's a slight pullback from 61% previously, according to the report.
Advisors can hold that same defensive position broadly through the State Street Health Care Select Sector SPDR ETF (XLV). The fund spans pharmaceutical, biotechnology, health care equipment and health care provider companies within the S&P 500.
See more: Drug Pipeline Wins State Street Over on Healthcare
Within that same sector, the ALPS Medical Breakthroughs ETF (SBIO) captures a narrower slice of the theme. It invests in small- and mid-cap biotech companies with drugs in Phase II or Phase III clinical trials. That makes it a more concentrated, higher-volatility bet than the sector overall.
Family offices are not choosing between defense and growth. At the same time as they hold steady on healthcare, they are leaning further into artificial intelligence. Interest in the sector rose to 45% from 37% a year earlier, reflecting its reach across industries, the study said.
Finance and fintech, still a small slice of overall allocations, jumped to 19% from just 8%, the report showed. Industrial applications held closer to flat, at 27% versus 24%, pointing to a more cautious stance toward cyclical, execution-heavy segments outside the defensive core.
North America and Japan Anchor the Map
Geographically, family offices remain concentrated in stable, developed markets rather than chasing growth in emerging economies. North America is considered relevant by 88% of family offices, the highest of any region tracked, the study found. Its depth and liquidity are the draw.
Northern Europe follows at 87% relevance and is the region family offices are most eager to expand into. Sixty percent plan to increase exposure there, according to the report.
Japan has become the preferred market outside the West. Seventy-two percent of family offices call it relevant, and 44% plan to raise their allocations there. Researchers tied the shift to corporate governance reforms and improving structural conditions.
A liquid version of that same wager already trades in the U.S. The WisdomTree Japan Hedged Equity Fund (DXJ) tracks Japanese exporters and dividend payers. It strips out currency swings between the yen and the dollar.
Thirty percent of family offices plan to reduce Middle East exposure, according to the study. The region is grouped with South America and Africa as non-core markets amid persistent geopolitical and economic caution.
Even as they add risk assets, family offices are holding onto more cash, not less. Ninety-four percent now keep a cash allocation, up slightly from 92% previously, the study found. Many maintain that cushion for liquidity and for the flexibility to move quickly when the next opportunity, or shock, arrives.
VettaFi LLC (“VettaFi”) is the index provider for SBIO, for which it receives an index licensing fee. However, SBIO is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SBIO.
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