Key Takeaways
- • North American family offices achieved a 15 percent average portfolio return in 2022, outperforming public equities (–18 percent) and bonds (–13 percent) by allocating significantly to private equity, real assets, and alternatives.
- • More than three-quarters of North American family office investors grew their wealth in 2022, driven by strategic capital deployment into private markets rather than traditional asset classes.
- • Family offices now manage more than $6 trillion in assets under management globally and are planning to increase allocations to private markets in 2023, reflecting a structural shift away from public markets.
- • The family office sector has grown tenfold in two decades, now numbering more than 10,000 worldwide, with these firms prioritizing decades-long generational wealth preservation over quarterly performance metrics.
- • High-profile examples include Bill Gates' Cascade Investment Company, which has accumulated approximately 270,000 acres of farmland since 2013, making him the largest U.S. landowner, demonstrating the long-term real asset strategy employed by leading family offices.
Summary
Family offices have emerged as significant outperformers in volatile market conditions, with North American family office investors delivering 15 percent average portfolio returns in 2022—a stark contrast to the stock market's 18 percent decline and bond index losses of 13 percent. According to research from London-based Campden Wealth and Royal Bank of Canada, more than three-quarters of North American family office investors expanded their wealth during this period, a performance advantage rooted in their strategic allocation to private markets and alternative assets.
The key to this outperformance lies in capital deployment strategy. Rather than maintaining traditional 60/40 stock-bond allocations, family offices significantly increased their exposure to private equity, real estate, and real assets. These institutions, which provide comprehensive financial, estate, tax, and investment services to high-net-worth individuals, have the structural advantage of operating with generational time horizons rather than quarterly reporting cycles. This freedom from short-term performance pressure allows them to sacrifice liquidity in exchange for superior long-term returns.
The family office sector itself has undergone dramatic expansion. The sector now encompasses more than 10,000 firms worldwide—ten times the number operating two decades ago—and collectively manages more than $6 trillion in assets under management. This growth reflects both the expansion of the global wealth class and the increasing complexity of managing substantial fortunes across multiple jurisdictions and asset classes. Notably, family offices are not constrained by the liability-matching requirements that govern institutional investors such as pension funds, freeing them to pursue wealth accumulation and preservation strategies across alternative asset categories.
The sector's commitment to private markets is likely to deepen. Family offices surveyed indicate plans to further increase allocations to private markets in 2023, positioning them to capture additional returns from illiquid, lower-volatility alternatives. A notable case study is Bill Gates' investment vehicle, Cascade Investment Company, which has systematically acquired farmland since 2013 and now controls approximately 270,000 acres, establishing Gates as the largest private landowner in the United States. This long-duration, real asset strategy exemplifies the multi-decade wealth-building approach characteristic of leading family offices in the current investment environment.
The key to this outperformance lies in capital deployment strategy. Rather than maintaining traditional 60/40 stock-bond allocations, family offices significantly increased their exposure to private equity, real estate, and real assets. These institutions, which provide comprehensive financial, estate, tax, and investment services to high-net-worth individuals, have the structural advantage of operating with generational time horizons rather than quarterly reporting cycles. This freedom from short-term performance pressure allows them to sacrifice liquidity in exchange for superior long-term returns.
The family office sector itself has undergone dramatic expansion. The sector now encompasses more than 10,000 firms worldwide—ten times the number operating two decades ago—and collectively manages more than $6 trillion in assets under management. This growth reflects both the expansion of the global wealth class and the increasing complexity of managing substantial fortunes across multiple jurisdictions and asset classes. Notably, family offices are not constrained by the liability-matching requirements that govern institutional investors such as pension funds, freeing them to pursue wealth accumulation and preservation strategies across alternative asset categories.
The sector's commitment to private markets is likely to deepen. Family offices surveyed indicate plans to further increase allocations to private markets in 2023, positioning them to capture additional returns from illiquid, lower-volatility alternatives. A notable case study is Bill Gates' investment vehicle, Cascade Investment Company, which has systematically acquired farmland since 2013 and now controls approximately 270,000 acres, establishing Gates as the largest private landowner in the United States. This long-duration, real asset strategy exemplifies the multi-decade wealth-building approach characteristic of leading family offices in the current investment environment.
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