Key Takeaways
- • 64% of U.S. family offices cited interest rates and 61% cited inflation as their largest portfolio risks this year, according to the J.P. Morgan Private Bank Global Family Office Report.
- • Family offices concerned about inflation reported holding about 60% of their portfolios in alternatives, with twice the exposure to real estate and hedge funds as peers, per the survey.
- • 65% of family offices cite artificial intelligence as part of their portfolio or a priority for future investment, making it the favored investment theme.
- • 72% of surveyed family offices have no gold exposure, with J.P. Morgan's David Frame saying the recent surge in gold prices makes them reluctant to add.
- • Family offices continue to hold large cash balances, with some保持 dry powder for a downturn and others earning yield while short-term rates remain elevated.
Summary
Family offices are preparing for higher inflation this year, with many turning to real estate and alternative investments as hedges, according to the J.P. Morgan Private Bank Global Family Office Report. The survey covered 333 single-family offices, the private investment firms of ultra-wealthy families, with an average net worth of $1.6 billion. Among U.S. respondents, 64% cited interest rates and 61% cited inflation as the largest risks to their portfolios and positioning, while geopolitics was the top risk among family offices globally.
According to the survey, family offices that identified inflation as a top risk held about 60% of their portfolios in alternatives and reported roughly twice the exposure to real estate and hedge funds. Private equity and hedge funds were highlighted as preferred alternatives. David Frame, global CEO of J.P. Morgan Private Bank, said that "most clients are worried about two things right now," namely inflation and geopolitics.
Artificial intelligence remains the favored theme, with 65% of family offices citing AI as part of their portfolio or a future priority. Health care, infrastructure and cybersecurity also ranked as popular themes. U.S. family offices reported 40% of investments in public equities, their largest asset class, and 34% in private investments spanning private equity, venture capital, private credit and real estate. Frame cautioned that AI exposure can also become concentrated within portfolios.
Family offices remain more cautious on gold than retail investors. Nearly three-quarters (72%) of respondents reported no gold exposure. Frame said the recent rally in gold prices makes family offices that are not already holders reluctant to add. Cash and cash equivalents also remain substantial, with some investors holding liquidity for opportunistic buys in a downturn and others capturing yield from high short-term rates. Frame noted that while the Federal Reserve has cut short-term rates, an inflation spike could keep rates elevated or push them higher, rewarding patient cash holders.
According to the survey, family offices that identified inflation as a top risk held about 60% of their portfolios in alternatives and reported roughly twice the exposure to real estate and hedge funds. Private equity and hedge funds were highlighted as preferred alternatives. David Frame, global CEO of J.P. Morgan Private Bank, said that "most clients are worried about two things right now," namely inflation and geopolitics.
Artificial intelligence remains the favored theme, with 65% of family offices citing AI as part of their portfolio or a future priority. Health care, infrastructure and cybersecurity also ranked as popular themes. U.S. family offices reported 40% of investments in public equities, their largest asset class, and 34% in private investments spanning private equity, venture capital, private credit and real estate. Frame cautioned that AI exposure can also become concentrated within portfolios.
Family offices remain more cautious on gold than retail investors. Nearly three-quarters (72%) of respondents reported no gold exposure. Frame said the recent rally in gold prices makes family offices that are not already holders reluctant to add. Cash and cash equivalents also remain substantial, with some investors holding liquidity for opportunistic buys in a downturn and others capturing yield from high short-term rates. Frame noted that while the Federal Reserve has cut short-term rates, an inflation spike could keep rates elevated or push them higher, rewarding patient cash holders.
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