Key Takeaways
- • BlackRock's survey of 175 family offices overseeing more than $320 billion found they averaged a 42% portfolio allocation to alternatives, up 3 percentage points from last year.
- • Nearly one-third (32%) of single-family offices plan to increase private credit allocations this year, while 30% intend to add infrastructure exposure through debt or equity.
- • Only 12% of respondents plan to reduce private equity allocations, though 30% reported optimism about the asset class versus 22% pessimistic.
- • Three-quarters of respondents reported bullish or optimistic views on infrastructure, with only 5% expressing pessimism, with BlackRock citing AI-driven demand for data centers and energy grids.
- • 62% of respondents favored special situation debt, and 51% were optimistic on private credit, though 21% expressed pessimism over borrower quality and default risk.
Summary
Family offices are increasingly diversifying into alternative assets, according to a new BlackRock survey of 175 family offices overseeing more than $320 billion combined, conducted between March 17 and May 19. Respondents averaged a 42% portfolio allocation to alternatives in recent months, up 3 percentage points from the prior year, and are making substantial changes to how they deploy capital.
Private credit and infrastructure were the leading areas of planned expansion. Nearly one-third (32%) of single-family offices intend to increase private credit allocations this year, and 30% plan to invest more in infrastructure through debt or equity. Within private credit, 62% of respondents favored special situation debt, which typically targets companies undergoing restructuring or financial stress, followed by direct lending. The report argues that private credit can offer more investor protection than private equity when done correctly.
Private equity retains a central role but faces headwinds. Twelve percent of respondents said they plan to reduce allocations to funds or direct investments, while 30% reported optimism about the asset class's prospects and 22% expressed pessimism. BlackRock's Armando Senra, who leads the firm's institutional business in the Americas, told CNBC that family offices overall are still investing more capital in private equity, but are diversifying across private markets. "Private equity continues to be a centerpiece of the portfolio," Senra said, citing liquidity concerns as the slowdown in exits forces investors to wait longer for returns.
Infrastructure sentiment was notably strong, with three-quarters of respondents reporting bullish or optimistic views and only 5% expressing pessimism. Senra described infrastructure as offering a "private-equity-type return with significantly lower risk" and said the sector provides a way to gain exposure to the artificial intelligence buildout, given demand for data centers and improved energy grids.
Senra acknowledged caution in private credit, where 51% of respondents were optimistic or bullish and 21% were pessimistic or bearish. Rapid capital inflows have raised concerns about borrower quality and potential defaults in a recession. "Whenever you have enough capital that captures a lot of attention, you really need to separate those managers that have experience across different market environments," he said. CNBC also reported in May that Jeff Bezos' family office backed a $155 million seed round for Atlas Data Storage, a DNA-style data storage firm.
Private credit and infrastructure were the leading areas of planned expansion. Nearly one-third (32%) of single-family offices intend to increase private credit allocations this year, and 30% plan to invest more in infrastructure through debt or equity. Within private credit, 62% of respondents favored special situation debt, which typically targets companies undergoing restructuring or financial stress, followed by direct lending. The report argues that private credit can offer more investor protection than private equity when done correctly.
Private equity retains a central role but faces headwinds. Twelve percent of respondents said they plan to reduce allocations to funds or direct investments, while 30% reported optimism about the asset class's prospects and 22% expressed pessimism. BlackRock's Armando Senra, who leads the firm's institutional business in the Americas, told CNBC that family offices overall are still investing more capital in private equity, but are diversifying across private markets. "Private equity continues to be a centerpiece of the portfolio," Senra said, citing liquidity concerns as the slowdown in exits forces investors to wait longer for returns.
Infrastructure sentiment was notably strong, with three-quarters of respondents reporting bullish or optimistic views and only 5% expressing pessimism. Senra described infrastructure as offering a "private-equity-type return with significantly lower risk" and said the sector provides a way to gain exposure to the artificial intelligence buildout, given demand for data centers and improved energy grids.
Senra acknowledged caution in private credit, where 51% of respondents were optimistic or bullish and 21% were pessimistic or bearish. Rapid capital inflows have raised concerns about borrower quality and potential defaults in a recession. "Whenever you have enough capital that captures a lot of attention, you really need to separate those managers that have experience across different market environments," he said. CNBC also reported in May that Jeff Bezos' family office backed a $155 million seed round for Atlas Data Storage, a DNA-style data storage firm.
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