Family offices prefer to invest in the secondaries market through direct secondaries and GP-led transactions and can find attractive angles and better discounts in smaller secondaries deals, a survey has found.
About 18 percent of family offices surveyed said they buy fund stakes and about 12 percent are considering selling positions, according to research conducted by PEI in collaboration with secondaries specialist Montana Capital Partners.
Half of the family offices surveyed said they do not invest in secondaries, while more than one-in-three invest in secondaries funds as part of their private equity programme.
Private equity overall accounts for a giant slice of family office assets, with more than one-in-three surveyed having an allocation to private equity of more than 20 percent of their entire portfolio. These allocations are only likely to grow according to the research: almost nine out of 10 respondents kept their allocation to the asset class constant or increased it over the past year, while 43 percent plan to increase it further from the current level.
“What is most notable is the size of the allocations and the fact that so many family offices are looking to increase their exposure,” Marco Wulff, co-founder and partner of Montana, told sister publication Private Equity International. “Why are they doing this? Because it has consistently outperformed other asset classes and they see pressure on returns elsewhere in their portfolios.”
Family offices are also much freer to shape their investment strategies in an unconstrained manner, said Christian Diller, also a partner and co-founder at Montana. “Whereas an insurance company has to keep an eye on allocations, an eye on its liabilities and an eye on regulatory constraints, a family office just looks at risk-return profiles and so is a little bit nimbler.”