Family offices reposition for growth but continue on the defensive

Yasmine Raso

Senior Journalist, Financial Newswire

23 July 2025

The balancing act between defensive positioning and growth opportunities has now spread to family offices as they rework their investment strategy amid unceasing global volatility, according to new data from Schroders.

The 2025 Schroders Global Investor Insights Survey found 90 per cent of sophisticated investors cited persistent uncertainty in US foreign policy as a key geopolitical risk that impacts investment decision-making, followed by worsening China-Taiwan relations (53 per cent), and armed conflict in Europe and the Middle East (both 36 per cent).

Theone Star, Head of Private Wealth at Schroders Australia, said the data showed a profound shift in the investment mentality of family offices given these perceived risks to their portfolios, with many turning to private markets and returning to active management strategies to navigate.

“We are seeing a notable shift in how family offices approach portfolio construction. Inflation, unpredictable central bank policies and geopolitical risks have created an environment where the traditional investment playbooks are no longer suitable,” Star said.

“Over half (56 per cent) of family offices identify building ‘portfolio resilience’ as their primary investment objective for the next 12 to 18 months. Nearly half (46 per cent) of respondents anticipate reducing their risk appetite, while only 17 per cent plan to increase exposure to risk.

“Policy related risks have also emerged as a major concern, with uncertainty around interest rates, regulatory changes, and election-driven market volatility prompting a reassessment of asset allocation.

“In response, family offices are increasingly turning to private markets, with private equity, real estate, and infrastructure investments becoming integral to achieving a balanced portfolio.

“Private assets provide access to high-growth opportunities with lower correlation to public market fluctuations, but perhaps more importantly, these assets offer greater control over investments, which is particularly valuable in periods of market turbulence.”

Sector-specific private equity (52 per cent) and small/mid cap buyouts (61 per cent) were highly favoured among the survey respondents as the top strategies offering the greatest return potential. Over 80 per cent of family offices surveyed also cited private debt and direct lending as providing the strongest risk-adjusted returns.

The research also showed a growing preference for active management after a recent dip in sentiment among investors, with 74 per cent of family offices saying they were confident in “active managers’ ability to deliver value, trusting specialist approaches and the ability to seek outperformance”. Over 85 per cent said they are likely to increase their allocations to active strategies in 2025.

Star said family offices also looked to maintain the balance between defensive allocations and emerging growth opportunities, with investments in digital assets, venture capital and thematic strategies rising as a result of incorporating younger family members’ interests and goals.

“This is precisely the type of market where active managers can deliver real value – active has the edge,” Star said.

“The ability to identify mispriced assets, quickly adjust positions, and capitalise on dislocations is crucial in today’s landscape.

“The most successful family offices will be those that combine disciplined risk management with the flexibility to capitalise on emerging opportunities. By maintaining a balanced approach, investors can position themselves for ongoing growth.”