North America's wealthiest families are fundamentally changing their investment strategies, moving billions of dollars out of high-risk, early-stage startups and into more stable assets like private credit and real estate. This pivot reflects a broader shift toward caution and a preference for steady income over the potential for explosive but uncertain growth.
A new report tracking the financial activities of family offices—the private firms that manage the fortunes of the ultra-rich—shows that private markets now constitute a significant portion of their portfolios, signaling a cautious outlook for the year ahead.
Key Takeaways
- Ultrawealthy families in North America are reducing investments in early-stage venture capital.
- Capital is being reallocated to private credit and real estate, which now account for 29% of portfolios.
- The primary investment goals for 2025 are improving liquidity and de-risking portfolios.
- Average return expectations have fallen sharply to 5% for 2025, down from 11% in 2024.
A Strategic Retreat From Risk
The days of chasing high-multiple returns in the volatile world of tech startups appear to be waning for the continent's most affluent investors. A comprehensive survey of 141 North American family offices, which on average manage $1.5 billion in assets, reveals a clear trend: stability is now prized over speculation.
This move away from venture capital marks a significant reversal from previous years. Where once early-stage innovative businesses were the top target for investment, they have now fallen down the priority list following a period of poor performance.
Who Was Surveyed?
The findings are based on responses from family offices collected between April and August. The North American families included in the study hold an average total wealth of $2 billion, providing a clear window into the mindset of the ultra-high-net-worth demographic.
The Rising Appeal of Private Credit
One of the biggest beneficiaries of this capital shift is private credit. As central banks maintain higher interest rates, lending directly to companies has become an increasingly attractive option for generating reliable income.
Family offices are drawn to the sector because borrowers are willing to pay higher interest rates for capital outside of traditional banking channels. This provides a steady, predictable cash flow that is insulated from public market volatility.
Private markets, which include private credit, direct private equity, and real estate, now make up 29% of the average family office portfolio in North America. This amounts to an estimated $62 billion based on the assets managed by the families surveyed.
Larger family offices are leading this charge, often investing through specialized funds or by co-investing alongside established private equity managers. Projections show that private credit is one of the top three asset classes expected to receive increased allocations in 2025.
Real Estate Remains a Cornerstone
Alongside private credit, real estate continues to be a foundational element of multigenerational wealth. Approximately 75% of family offices hold real estate investments, with a clear preference for specific sectors poised for growth.
The most favored areas for investment are:
- Industrial and Logistics: 30% of families are directing capital here, driven by the persistent growth of e-commerce.
- Residential Housing: 23% are focused on this sector, particularly in the rental market.
Investment performance is particularly strong in the Sun Belt states, where robust population and job growth are fueling demand. Affordability challenges in the home-buying market have pushed more people into renting, creating a strong and sustained demand that investors are keen to meet.
Why Venture Capital Lost Its Shine
The cooling interest in startups is not just about seeking safety; it's also a reaction to disappointing results and long timelines. Many family offices have reported underwhelming year-to-date returns from their venture capital and private equity fund investments.
"This only happens 20 to 30% of the time," the chief executive of a California-based single-family office said regarding major windfalls from early-stage deals. "The trick is to minimize the number of failures."
This sentiment captures the new mood perfectly. The decadelong wait for a potential venture payoff is less appealing when safer assets like private credit can offer significant, immediate yields. Family offices, which value patience but also liquidity, are re-evaluating whether the risk is worth the reward.
A New Era of Lower Expectations
This strategic pivot is underpinned by a dramatic reset in expectations. The primary investment objective for nearly half (48%) of family offices in 2025 is to improve liquidity. Another 33% cited de-risking their portfolios as a top priority.
This caution is reflected in their return forecasts. Average return expectations for the coming year have been slashed to just 5%, a steep decline from 11% in 2024. Furthermore, 15% of family offices are now bracing for negative returns—a level of pessimism not seen last year, when virtually none expected losses.
The message from the world's wealthiest is clear: after a period of aggressive growth-chasing, the focus has shifted to wealth preservation and the steady, quiet work of generating predictable income.
