Family offices differ in approach to digital assets vs. crypto, per survey
Family offices are taking a different approach to digital assets in general versus the narrow subset of cryptocurrency, according to the Goldman Sachs 2023 Family Office Investment Insight Report, which surveyed 166 family offices around the world. About 32% of them invest in some form of digital assets – whether crypto, blockchain technology, stablecoins, NFTs, decentralized finance, and blockchain-focused funds.
“While a greater proportion of family offices are now invested in cryptocurrency (an increase from 16% in 2021 to 26% in 2023), family offices not invested in any form of cryptocurrency but interested for the future declined from 45% in 2021 to only 12% in 2023, says Sara Naison-Tarajano, the global head of Private Wealth Management Capital Markets at Goldman, tells Crain Currency. “For those not already invested in cryptocurrency, 62% report that they aren’t interested for the future, up from 39% in 2021.”
While the market remains volatile, family offices are also planning to buy more stocks, and alternative investments this year, with 48% of those surveyed saying they plan to increase their allocation to public equities. “With the upcoming debt ceiling negotiations, we expect family offices will be opportunistic amid potential market dislocations,” says Meena Flynn, co-head of Global Private Wealth Management at Goldman.
In addition: 41% plan to increase their allocation to private equity, 39% in fixed income, 30% in private credit and 27% in private real estate and infrastructure.
Currently, the family offices surveyed had nearly half (44%) of their holdings in fixed income and alternative investments, with 26% in private equity, 9% in real-estate and infrastructure, 6% in hedge-funds 3% in private credit and 5% in commodities and other investments.
The huge increase in interest in private credit comes as regional banks pull back on lending in the wake of the Silicon Valley Bank and First Republic Bank collapses. The private credit market – in which funds and family offices loan money directly to companies – is currently at $1.4 trillion and is expected to grow to $2.3 trillion by 2027, according to Preqin.
As for which sectors are attracting their interest, Naison-Tarajano says she sees philanthropy and investing converging around themes that are important to the family. “For example, a family may donate to cancer research on a charitable basis and deploy additional capital in biotech investment opportunities to complement that mission with the potential for attractive investment returns.”