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Family offices are reportedly investing a lot more in a certain type of alternative investment amid global uncertainty, according to the biggest asset manager in the world.
Private credit is emerging as a top alternative asset for family offices, according to a new survey by BlackRock, reports Bloomberg.
Of the 175 family offices around the world that were surveyed, more than half have a bullish outlook on private credit and nearly one-third say they are planning to increase allocations to the asset class this year.
Says Armando Senra, head of the Americas institutional business at BlackRock,
“They are diversifying their exposure within private markets. While allocations used to be primarily into private equity growth, now what you see is high interest in private credit, the beginning of interest in infrastructure.”
The survey also finds that 30% of respondents plan to commit more of their money to the infrastructure market.
Lili Forouraghi, BlackRock’s head of family offices, health care, endowments, foundations and official institutions in the US, says the super-rich are increasingly interested in the potential of private credit to generate a higher yield than public bond markets.
She also says that infrastructure investments related to decarbonization and “the whole buzz of AI plus data centers, those are the areas that have intrigued a lot of our clients.”
The survey finds that, on average, alternative investment comprises 42% of assets in family office portfolios, up from 39% in a prior 2022-2023 survey, and that private credit holdings make up anywhere from 15% to 30% of some family offices’ portfolios.
