In an interesting indication of investor sentiment, UK-based family offices are looking to decrease their investment interest in private markets – bucking the investor trend which has seen investors flock into the private market segment.
For example, when looking a timescale from 2024 and 2025, family office interest in making new investments in private equity (PE) dropped considerably: from 73% to 35%, and a similar trend is revealed when it comes to venture capital (VC) investment: which saw a drop from 67% to 33%.
These stark numbers are revealed in a new survey by AYU, the global private members’ club for family offices and investment professionals, after it polled its family office membership over a two-year period to track investment trends.
This could be an interesting investor indicator, given family offices can provide an insight into market sentiment, as they are largely insulated from the short-term swings of some investors but their investment outlook tends to be more dynamic and opportunistic than that of many institutional players.
As a result, shifts in family office allocations could be said to offer a useful, early sign of potential changing priorities in the wider market.
This shift may reflect uncertainty about the medium-term economic outlook, while at the same time highlighting the attraction of strong short-term opportunities emerging in other markets.
However, a simpler explanation may be that much of the capital committed to PE and VC in prior years has not yet been returned, reducing the number of families currently able to commit fresh funds to these strategies.
“Anecdotally, the reduced appetite in the PE and VC areas is being attributed by some families to heavy allocations in the previous year, but these survey results nonetheless represent a meaningful rebalancing of focus among these LPs,” said Toby Abel, CTO at AYU. “Families are still actively allocating significant additional capital to these sectors, but fewer families are now doing so compared with 2024.”
AYU’s membership includes over 200 UK family offices.
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