Wealthy families, through their family offices, are shifting focus toward private credit and infrastructure, reflecting a broader trend in the investment landscape.
According to BlackRock’s Global Family Office Survey of 175 single-family offices, 39% plan to increase allocations to private credit, making it the top alternative asset class for future investment. Infrastructure investments follow closely, with 32% of respondents aiming to expand positions or enter the market, while only 2% anticipate reducing exposure.
This heightened interest coincides with increasing geopolitical uncertainty, a challenge cited by 84% of surveyed family offices. In response, 64% are prioritizing portfolio diversification, leaning into alternative assets for stability and potential outperformance.
Navigating Private Markets with Precision
Family offices are approaching private markets with a discerning eye. “Investors are scrutinizing diversification across private markets more carefully than ever,” says Armando Senra, BlackRock’s head of Americas institutional business. This is particularly evident in their evolving stance on private equity (PE). Once a cornerstone of alternative investment strategies, PE now faces skepticism due to underwhelming returns, high fees, and delayed distributions. With higher interest rates eroding the appeal of leveraged strategies, 72% of respondents expressed concerns over private market fees.
As a result, family offices are reallocating toward private credit and infrastructure, driven by their potential to deliver superior returns and diversification. Private credit already comprises 15% to 30% of portfolios for some surveyed families, offering an attractive risk-adjusted alternative to public debt.
Infrastructure Gains Momentum
Infrastructure investments are drawing renewed attention, bolstered by the global energy transition and escalating demand for digital infrastructure to support technologies like AI. “A few years ago, infrastructure wouldn’t have resonated with family offices the way it does now,” Senra explains. These assets not only address sustainability and technological growth but also provide a hedge against inflation and economic instability.
Shifts in Sentiment vs. Allocation
While investor sentiment has shifted sharply, asset allocation changes are more measured. “Sentiment often moves faster than actual allocation decisions,” notes Senra. The current environment reflects this lag, as family offices assess opportunities without immediate large-scale reallocation.
BlackRock’s Strategic Moves
Anticipating these trends, BlackRock has positioned itself as a leader in the private credit and infrastructure markets. In October, it acquired Global Infrastructure Partners for $12.5 billion, significantly expanding its infrastructure capabilities. By December, BlackRock was in the process of acquiring HSP Investment Partners, a private credit firm, further solidifying its commitment to meeting client demand in these areas.
For family offices, the pivot to private credit and infrastructure represents a strategic response to a complex market environment. These investments are not only reshaping portfolios but also aligning with broader economic and technological shifts, positioning wealthy families for resilience and growth.
