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Family Offices With $182 Billion Eye More Big Gains on PE Bets

Money managers for the ultra-wealthy plan to increase their allocation to private equity in 2023, according to a new survey.

(Bloomberg) -- 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 released Wednesday. 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% and 26% 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% of their portfolios in the asset class this year, up from 22% in 2021. Thomson’s venture arm has allocated money to more than 80 early-stage companies.

The report found that 46% of North American family offices intend to invest more in buyout funds in 2023, and 41% 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%, 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% saying they plan to increase allocations in 2023.

To contact the authors of this story:
Benjamin Stupples in London at [email protected]
Amanda Albright in New York at [email protected]

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