Limelight Belongs to Family Offices

Family offices now control some $3-to-$4 trillion in assets. The number is likely larger than the amount managed by hedge funds. This growth trend represents a dramatic shift in how investments are funded worldwide. For dealmakers, the challenge is identifying who those players are and how to access them. Rockefeller & Co. may be easy enough to sort out; a family office for an Indonesian mogul is a different matter altogether. One reason why this investor segment is growing so rapidly is that it may be cheaper to manage amounts greater than $500 million internally, than to outsource it. But more importantly, families often prefer to curate portfolio decisions for affinity reasons. Unlike standard portfolio models, an allocation of 40%-to-50% to alternatives, including real estate, is common.

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