Family Offices Increasing Hedge Fund Allocations Amidst Unprecedented Industry Growth

Family Office Networks reported today that hedge fund allocations from the fast-growing family office sector are set to increase 35 percent during 2022, as the industry continues its unprecedented growth trajectory across all hedge fund strategies – from traditional long-short managers to specialized funds geared to cryptocurrency, AI, cannabis and more. According to FON, more capital is being allocated to hedge funds than ever before as family offices seek better returns in a down market as well as a hedge against recent volatility in the marketplace.

“Roughly 35% of the family offices that we have surveyed over the past few months have mentioned that they plan on increasing their allocation into hedge fund products. When the broader capital markets are down, family offices are looking for preservation of capital. With that in mind, we are planning high-profile hedge fund thought leadership events and fielding more requests than ever from investors who seek to access top-tier funds. We’re also working with select managers who want to be members of our group or need support in areas such as capital introduction and trading operations,” said Andrew Schneider, Founder, and CEO of Family Office Networks.

According to Barclays, hedge fund assets under management grew to an all-time high of nearly $4 trillion in Q3’21, driven by returns over more than 10% and inflows totaling $24 billion. These results mark the third consecutive year of double-digit growth. Based on its latest investor survey, Barclays’ Strategic Consulting team expects this strong momentum to continue building as investors appear more bullish across all hedge fund strategies. A recent Goldman Sachs report echoes this bullish sentiment by stating, “Family offices’ asset allocation tends to have outsized exposure to alternative investments. This reflects their higher return hurdles, patient capital pools, and professional diligence
capabilities. On average, respondents’ portfolios have a 45% combined allocation to private equity, real estate, private credit, and hedge funds.”

“We are seeing a surge in interest in the hedge fund sector among substantial families which is good news for managers who seek allocations from family offices. Often, however, family offices can be hard to find and challenging for fund managers to get in front of them to tell their stories. Our group has a global network of 10,000+ family offices and we help educate them about various products and services,“ Schneider said.

“We’re planning to allocate an additional 30% to hedge funds in the first quarter of this year and are in the process of conducting due diligence on a select few. In addition, we’re seeking to broaden our outreach to identify other top-tier managers for the balance of the year,” said Michael DeLuca of DeLuca Family Office.

“We get approached by a number of hedge funds but unfortunately we’ve also seen lackluster performance by many of them. That said, we’re on the hunt for the best performing funds out there who have the potential to deliver in the months and years ahead,” said Adam Goldstein of Goldstein Family Office.

For information about Family Office Networks, please contact Andrew Schneider at Andrew@familyofficenetworks.com.