The world’s super-rich are looking to take advantage of the shifting macroeconomic and geopolitical landscape by boosting investments in public and private markets, according to BlackRock Inc.
Almost three-quarters of family offices responding to a recent survey reported they plan to increase allocations to investment grade public debt, with about half bullish on infrastructure bets, the New York-based firm said in a report.
Some 76 percent of the 120 companies polled said they’re reviewing their portfolios more frequently now amid continued volatility, with more than 50 percent — or roughly twice the rate of 2020 — saying they’ll change investment strategy in response to the market environment. The participating firms had $243 billion in total assets under management.
“The new market regime has reshaped the opportunity set,” Victoria Matthews, head of U.K. family offices, endowments and foundations at BlackRock, said in an interview. Family offices are asking about tactical allocations and are seeking to be “more agile,” she added.
Family offices, loosely regulated money managers for the ultra-wealthy, have proliferated globally in the past two decades, driven by booms in tech and finance as well as growing Asia fortunes. More than half of the firms surveyed by BlackRock and research consultancy Illuminas between November and January were set up after 2010.
Yields on investment grade bonds have increased sixfold over the past three years amid rising inflation and are at the highest levels in more than a decade. That’s created “a generational investment opportunity,” Rick Rieder, BlackRock’s chief investment officer of global fixed income, wrote in the report.
“This is a critical moment to take a fresh look at more flexible fixed-income strategies, as we navigate the most volatile inflationary episode and steepest hiking cycle in decades,” Rieder said.
Infrastructure was the most popular future investment area for family offices allocating to private markets, with 42 percent planning to increase their bets. Higher inflation was the most frequently cited variable affecting the firms’ investment strategies, with 62 percent mentioning the issue, BlackRock said.
“The infrastructure play is twofold,” Matthews said. “It’s about inflation protection, but it’s also a great way to play the energy transition.”
Some members of the ultra-wealthy are already making their moves. U.K. billionaires David and Simon Reuben bolstered their New York property investments this month as the city’s retail market rebounds from pandemic lows. Hedge-fund billionaire Michael Platt’s BlueCrest Capital, meanwhile, added almost 100 new U.S.-listed stocks this year, taking his private investment firm’s portfolio to $3.1 billion through the end of March.
The Reubens and Platt have a combined fortune of about $25 billion, according to the Bloomberg Billionaires Index.