Family offices are upping their direct investments rather than making those investments through third-party funds, according to a new Enhancing Family Wealth study from BNY Mellon Wealth Management.
Of a surveyed 189 single-family offices worldwide, 62% said they made six or more direct investments over the past year. In the next 12 months, BNY Mellon said, the number of family offices planning to make six or more direct investments will grow to 71%.
“Direct investment involves negotiation with a private company over the provision of debt or equity, rather than gaining exposure through a third-party fund,” BNY Mellon said in its study. “While two-thirds of family offices do their own internal due diligence on direct investments, nearly half will seek input from an investment consultant.”
Nearly 80% of family offices cited artificial intelligence as one of the top three investment opportunities over the next five years, making AI the most attractive investment theme among those surveyed. The following most popular themes were sustainable investments (63%), renewable energy (42%), health care (35%) and deglobalization (19%).
Family offices with between $250 million and $499 million in assets under management made up 25% of survey respondents, and those between $500 million and $999 million accounted for 33%. An additional 32% of respondents had between $1 billion and $4.9 billion in assets under management. Family offices over $5 billion totaled 10% of respondents to the survey, with 69% of all participants from U.S. family offices.