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Chart of the week

Family offices plan material increase to private markets

This week’s chart looks at family office CIOs’ plans to increase allocation to alts in 2024, specifically private credit and private equity.

February 16, 2024 | 3 minute read

Expected family office allocation changes in 2024

COTW-2024-02-16- BLog

Source: KKR 2023 Family Capital Survey, as of January 31, 2024.

  • Stocks’ strong return last year combined with the S&P’s historically high valuations today has left many investors with a difficult allocation challenge. The S&P’s historic levels of concentration in mega cap tech stocks may make allocation decisions more difficult.
  • What’s more, some investors may have missed out on last year’s rally if they were overallocated to cash. More than $1 trillion flowed into risk-free money market funds in 2023 amid near omnipresent recession speculation and the elevated rate environment.1
  • Against this backdrop, a survey of family offices released this week showed how some Chief Investment Officers plan to tackle these allocation challenges—moving toward private and alternative investments. 
  • As the chart shows, family office respondents overwhelmingly expect to reduce their allocations to cash and traditional public equities in favor of private equity and private credit, among other asset classes.2
  • Both asset classes may be particularly attractive today. Private credit offers investors a potential yield premium over syndicated loans within today’s competitive credit market. On the other hand, private equity offers investors compelling growth potential with limited correlation to traditional public equity markets.

  • Bloomberg Finance, L.P., as of February 1, 2024. Money Market Fund AUM is represented by ICI All Money Market Funds Total Nets Assets.

  • KKR 2023 Family Capital Survey, as of January 31, 2024.

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