Geopolitical risks force family offices into alternatives, cash: Survey

Geopolitical uncertainties are forcing family offices out of US equities, diversifying into cash and liquid alternatives, according to BlackRock's annual Global Family Office Survey.

Global family offices find themselves in "risk-management mode" as more than two-thirds (68%) are scrambling to diversify their assets.

The majority (84%) said the current geopolitical uncertainty is the most important issue for them and is a critical factor in their capital allocation decisions.

Alternatives are benefiting from increased allocations and now make up 42% of single-family office portfolios, up from 39% in 2022.

Private credit and infrastructure specifically are the most-favoured alternatives. Nearly one-third (32%) of family offices intend to increase their allocations to private credit (32%) and infrastructure (30%) in 2025-26.

Infrastructure is also gaining strong momentum, with three-quarters (75%) of respondents feeling positive about the prospects for the asset class.

BlackRock head of the Americas institutional business Armando Senra said with 60% of family offices pessimistic about the global outlook, confidence has been further shaken by new US tariffs.

"Family offices are now prioritising diversification, liquidity, and structural reassessment of risk as they build resilience in their investment portfolios," he said.

Many of the 175 single-family offices surveyed, which collectively have US$320 billion in assets, want to collaborate with external partners, especially when it comes to private markets.

More than half noted gaps in their internal expertise around reporting (57%), deal-sourcing (63%), and private-market analytics (75%).

Around one-quarter (22%) have used an outsourced chief investment officer (OCIO) or would consider doing so.

The majority would also consider using artificial intelligence (AI) for a variety of tasks from risk management to cash-flow modelling.

Nearly half (45%) are more likely to invest in technology firms building AI solutions (45%) or in investment opportunities they believe will benefit from the growth in AI (51%), than they are to deploy AI tech internally to improve the investing process (33%).