Investment firms for the world’s ultra-rich are planning to boost private equity bets after notching double-digit returns last year, a survey found.
Nearly half of North American family offices say they intend to increase holdings in the asset class, according to a report from Royal Bank of Canada and Campden Wealth. Private equity was the top performer in the portfolios of the 179 firms surveyed, which collectively have an estimated $182 billion of assets under management. Their gains averaged between 21 percent and 26 percent last year across direct and fund allocations, as well as venture capital.
“The key story this year is about private equity,” RBC and Campden Wealth said in their 2022 North America Family Office Report. “Looking to 2023, North American family offices plan on increasing their allocations to private equity more than to any other asset class.”
Family offices have boomed in number worldwide over the past two decades, partly because of surging fortunes across tech, finance and real estate. The vehicles, which manage the personal capital of the ultra-wealthy, are lightly regulated, nimble and as public or private as the founder wants.
Some of the largest family offices — including that of Peter Thomson, a member of dynasty behind media giant Thomson Reuters Corp. — are major investors in private equity. The firms surveyed had an average of about 27 percent of their portfolios in the asset class this year, up from 22 percent in 2021. Thomson’s venture arm has allocated money to more than 80 early-stage companies.
The report found that 46 percent of North American family offices intend to invest more in buyout funds in 2023, and 41 percent plan to increase direct deals. Their allocations to private equity helped them outperform peers in Europe and Asia last year, with an average portfolio return of 15 percent, according to the survey.
Family offices also reported dabbling in nonfungible tokens and the metaverse. Almost one-in-four currently has metaverse-related investments, with 13 percent saying they plan to increase allocations in 2023.