Family offices in India are projecting a 14 per cent growth in assets under management (AUM) and a 5 per cent increase in alternative investments over the next three years, according to a report.
The AUM of mid- to large-sized family offices in India is set to grow at a compound annual growth rate (CAGR) of 14 per cent over the next three years, potentially increasing by 1.5 times, according to a report by Sundaram Alternates titled ‘From Legacy to Leadership’.
This report highlights the important evolution of family offices as they move from wealth preservation to a growth-focused mindset.
Indian family offices are increasingly embracing alternative investments, with allocations projected to rise from 5 per cent to 18 per cent over the next three years, he said.
This is in line with a global trend, where family offices allocate more than 50 percent of their assets to alternatives, he said.
The move reflects a strategic move towards diversification, niche investment strategies and active participation in India’s growth story, particularly through startups and innovative ideas, he said.
According to the report, Alternative Investment Funds (AIFs) are gaining traction among Indian family offices as a preferred tool to access private markets and startups, it said.
FIAs offer a diversified portfolio that mitigates risks compared to individual investments, he said, adding that the expertise provided by FIA managers in selecting opportunities across the risk-return spectrum is driving this trend, with many family offices opting for co-investments with existing funds to execute high-conviction strategies with minimal operational challenges.
Allocations to mutual funds, PMS, AIF and gold are anticipated to see modest increases, while fixed income and physical real estate are likely to see a decline, it said.
Allocation to emerging companies is expected to remain stable as family offices continue to explore and capitalize on opportunities in this sector, he added.
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