Direct investing for family offices: Balancing risk and reward
Direct investing has seen tremendous growth over the past decade as family offices seek greater control over their investments. But what have been the drivers behind this trend and what are the pros and cons that direct investing brings to the table?
direct investments for family offices
Investments Updated on January 16, 2024

While direct investment has been an option for family offices since the early 2000s, their popularity surged between the 2010-2015 period, highlighting the highest growth in direct investment activity in any 5-year period since 1990. The 2020 FINTRX Family Office Industry Report further noted that, on average, 55% of family offices were making direct investments across the globe. We will take a deeper dive into what makes direct investing such a lucrative investment strategy for family offices and what potential advantages it holds over the existing traditional ones.

The drivers of the trend

A recent EY report suggested private market investments accounted for nearly 18% of total asset allocation by family offices and UHNWIs in 2021. These investments were traditionally executed via third-party asset managers. However, an increasing number of family offices, especially single family offices, have begun exploring sophisticated in-house investment infrastructures to pursue these investments directly. Here are the primary drivers behind this trend:

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