Family offices in India are expected to post a 14 per cent CAGR growth in their assets over the next three years as they transition from wealth preservation to a growth-focused mindset, according to a report by Sundaram Alternates.
The report notes that Indian family offices are increasingly embracing alternative investments, with a projected 5 per cent increase in allocations to 18 per cent over the next three years. This aligns with a global trend, where family offices allocate more than 50 per cent of their assets to alternatives.
“The shift reflects a strategic move toward diversification, niche investment strategies, and active participation in India’s growth story, particularly through start-ups and innovative ideas,” the report said.
The report details expected shifts in asset allocations for family offices over the next three years. Allocations to mutual funds, PMS, AIFs, and gold are anticipated to see modest increases, while fixed income and physical real estate are likely to experience a decrease. The allocation to start-ups is expected to remain stable as family offices continue to explore and capitalise on opportunities in this sector.
Major hurdle
Despite the promising growth and diversification, family offices face significant challenges in attracting and retaining talent, with over 55 per cent of respondents citing this as a primary concern. The competition for talent with large wealth managers and asset managers is fierce, and family offices require specific skills such as understanding the family vision, aligning with the parent entity’s philosophy, and navigating complex family dynamics.
Vikaas M Sachdeva, Managing Director, Sundaram Alternates, said: “Family offices in India are at a pivotal juncture where the integration of traditional values with modern investment strategies is driving significant growth. Our report underscores the importance of governance, diversification, and talent management in shaping the future of family offices. As they navigate this complex landscape, it is crucial that they remain agile and forward-thinking to capitalize on emerging opportunities and sustain their legacy across generations.”