**Key Findings**
Here are, in my opinion, the four most interesting findings:
- **58%** of those surveyed increased allocations to private markets over the past two years.
- The amount of cash family offices are holding now has increased across the board.
- Around **25%** said exploring new asset classes was a priority when it comes to adjusting the investment process in the near future.
- **80%** of respondents identify both higher risk-adjusted returns and the ability to be a value-add investor as significant benefits of private market investing.
**Survey Scope and Methodology**
Let us dig a bit deeper. We sampled 55 single family offices and private multi-family offices, predominantly in Europe. Please note this survey focused only on private markets investment activity, which means the sample is biased towards offices that have, or plan to be, active in private markets. The data was collected in September 2022, subsequent to significant sell-offs in public markets earlier in the year.
**Asset Allocation Trends**
First, we look at asset class allocation changes over the past two years. The majority of those surveyed have significantly or slightly increased their cash positions. Private markets saw the second-largest increase in allocations.
**Outlook by Asset Class**
Looking forward, what is the outlook for asset classes over the next year? Sentiment in general is bleak. The bright spots of positive sentiment focused around private markets, with slightly positive sentiment around real estate and commodities.
**Private Markets: Current Activity**
Next, we take a look under the hood of private markets activity, starting with how family offices surveyed currently are investing in private markets. Notably, **96.4%** currently allocate to venture, with the majority doing so via both funds and direct investments. The fewest aggregate respondents invested in buyout strategies.
**Private Markets: Expected Changes**
Looking forward, there is a slight contraction, most significantly in venture strategies, with almost twice as many planning not to allocate to the category going forward (still a very small proportion). Interestingly, there is a reduction across the board in expected fund allocations, but a significant increase in expected co-investment allocations.
**Perceived Benefits and Barriers**
Finally, we shift our focus to perceived benefits and barriers to private markets investing. A significant number of respondents said that perceived benefits include higher risk-adjusted returns and the ability to ‘add value’ as an investor.
There is not too much to unpack in the barriers to investing in private markets. A reasonably high number report a lack of specific knowledge of asset classes (**65%**). Typical concerns are around risk and liquidity, which tracks with higher expected returns and the illiquidity premium.
**Planned Changes to Investment Processes**
Lastly, planned changes to investment processes show an increase in plans to enter new asset classes. This reflects a push for greater diversification, which will require additional expertise, either through recruiting more staff or increasing the use of external advisors.
