U.S. family offices are increasingly looking abroad for investments and deals in Europe and Asia amid market volatility, tariffs and inflation concerns at home. Yet some advisers caution that the current rally in European stocks may not last.
So far this year, European stocks have outperformed their U.S. counterparts, with the MSCI Europe Index up nearly 15% compared with the S&P 500’s decline of 2.8%. Much of the growth is attributed to increased military and infrastructure spending across the continent, along with a healthy banking sector and rising wages driving consumer activity.
Several European defense exchange-traded funds have surged in recent weeks. The WisdomTree Europe Defence ETF has attracted $588 million since its launch March 4, while the VanEck Defense UCITS ETF has pulled in $1.9 billion since the start of the year — more than $1 billion of that in March alone.
“We have been focused on European startups — defense is big right now,” said a managing director at a New York-based family office. “It’s about diversifying our portfolio in a smart and strategic way while the markets are so chaotic here in the States.”
Tim Houghton, global head of private wealth and family wealth at the TMF Group, said: “We were approached by an investment bank with a U.S. client looking to invest into Asia to diversify away from their purely domestic investments. They were concerned about geopolitical uncertainties following the U.S. election.”
In the end, they selected Vietnam as an investment target.
AlTi Global, a wealth manager and family office overseeing more than $77 billion in assets, recently acquired Kontora Family Office GmbH, one of Germany’s leading multifamily offices. It marks the firm’s first European acquisition since strategic investments from Allianz X and Constellation Wealth Capital, following a spate of U.S. acquisitions last year.
Besides the European defense and infrastructure sectors, real estate is attracting investor interest. According to Columbia Threadneedle’s Real Estate Outlook for 2025, opportunities are emerging on the continent due to “Europe’s improving office sector [which] has not been as negatively impacted as the U.S. office market has been.”
Overall, European stocks “remain attractively priced, supported by strong fundamentals and promising growth potential, presenting undervalued investment opportunities,” Alison Savas, investment director at Antipodes Partners, said in an interview with Pensions & Investments, a sibling publication of Crain Currency.
Still, some analysts are cautious about the long-term prospects. Daniel Sereda, chief investment analyst for a global family office, wrote in a Seeking Alpha post that he “wouldn’t be overly optimistic about how far the current rally in European stocks might go at the expense of U.S.-based capital outflows.”