The Global Family Office Report by BlackRock, based on a survey of 175 single-family offices overseeing over U.S. $320 billion in assets (conducted between March and May 2025), reveals how family offices are navigating a significantly altered global economic and geopolitical landscape. The report highlights a shift in investment strategies, increasing reliance on alternative assets, a growing appetite for private credit and infrastructure, a move towards deeper partnerships, and a cautious but curious approach to Artificial Intelligence.

I. Market Outlook: Navigating a New World Order

Family offices are operating in an environment characterized by policy-driven economics, shifting alliances, and political fragmentation. This “rewriting of the rules” has led to increased caution and a fundamental rethinking of investment approaches.

Geopolitical Tensions as a Core Challenge: An overwhelming 84% of family offices identified the current geopolitical landscape as a key challenge and an increasingly critical factor in their investment decisions. This reflects a broader sense of instability.

Souring Sentiment Post-Tariff Announcements: Initial caution escalated significantly after the U.S. administration announced tariffs on April 3rd, dubbed “Liberation Day.”Bearish sentiment regarding the global outlook rose from 57% to 62%.Concern about a possible U.S. economic slowdown increased from 39% to 43%.Confidence in achieving return targets for 2025-2026 fell dramatically from 64% to 51% post-April 3rd. An EMEA family office noted, “They have the potential to disrupt, and turn on its head, a global world order that was clear, well-understood, and stable.”

Focus on Diversification and Liquidity: In response to this uncertainty, 64% of family offices are actively seeking to improve portfolio diversification, and only 33% feel comfortable with their portfolio liquidity. Many are making tactical adjustments, such as raising cash and looking to secondary markets.

A New Playbook for Higher Volatility:The report, through an internal perspective from Mike Pyle, Deputy Head of the Portfolio Management Group, emphasizes the need for a new playbook. This includes:

• Staying invested to avoid missing sharp market reversals.
• Enhanced diversification, both geographically and into uncorrelated return streams like liquid alternatives and hedge funds, as traditional U.S. asset diversification has faltered.
• Focusing on underlying economic fundamentals despite sentiment swings.
• Embracing active management, tactical flexibility, and selectivity in a world where “beta alone no longer suffices.”

II. Alternatives: A Cornerstone with Rising Fee Concerns

Alternative assets continue to form a significant portion of family office portfolios, valued for their distinct return characteristics, but concerns about costs are growing.

Growing Allocation: Alternatives now make up 42% of family office portfolios, up from 39% in the previous survey. This highlights their enduring appeal as a source of differentiated return streams and illiquidity premia.

Compelling Reasons: The most compelling reasons cited for investing in private markets include:

• Illiquidity premium (87%)
• Lower-correlated sources of return (67%)

Rising Fee Challenge: The most significant challenge to investing in private markets is high fees, cited by 72% of respondents, a substantial increase from 40% in the prior survey. This isn’t necessarily a rejection of the compensation model, but a demand for “value for money,” as one respondent stated, “I’m happy to pay three and 40 if the manager genuinely adds value.”

Mixed Sentiment on Private Equity (PE): While PE remains a core allocation (sometimes exceeding 50% of AUM), sentiment is mixed, with 30% bullish, 48% neutral, and 22% bearish. Concerns include falling Internal Rates of Return (IRRs), delays in returning capital, valuation mismatches, and lack of transparency for exits. Family offices are now placing greater emphasis on manager selection and strategies that offer more flexible liquidity options.

III. Private Credit: Moving to the Fore

Private credit has evolved into a highly attractive core allocation for many family offices due to its compelling yield, total return, and liquidity profile.

Strong Bullish Sentiment: Over half (51%) of family offices feel positive about private credit’s prospects, against only 21% with a negative outlook.

Highest Allocation Increase: Nearly one-third (32%) plan to increase their allocations to private credit in 2025-2026, making it the highest figure for any alternative asset class in the survey.

Favored Strategies: Family offices show a clear preference for:

• Special situations/opportunistic (62%)
• Direct lending (53%) These strategies are seen as offering equity-like returns with better structural protection.

Concerns and Opportunities: Some concerns exist about crowding in the space and potential performance during a recession. As one EMEA respondent noted, “I don’t think we have been challenged by a credit cycle, which is a bit difficult.” However, others view potential volatility as an opportunity, with a Latin American respondent stating, “I am excited about volatility because this is when you make the most money, when everyone panics.”

Market Broadening: Amanda Lynam of BlackRock highlighted that while demand for private credit has increased, the market has also broadened, reaching larger companies and deals, including those with public debt market access. She emphasized the importance of “back-to-basics” credit analysis, focusing on high-quality deals, and choosing managers with proven restructuring experience.

IV. Infrastructure: Riding Secular Growth Themes

Infrastructure is gaining significant momentum among family offices, appreciated for its resilience, stable cash flows, and alignment with long-term trends.

Very Bullish Sentiment: Three-quarters (75%) feel positive about infrastructure’s prospects, with only 5% citing a negative outlook, making it even more bullish than private credit.

Second Highest Allocation Increase: Three in ten (30%) plan to increase their infrastructure allocations in 2025-2026, second only to private credit.

Key Attractions: Family offices value infrastructure for:

• Stable cash flows
• Alignment with long-term secular growth themes (e.g., energy transition, digital connectivity)
• Perceived resilience and inflation mitigation An APAC family office summed it up: “Infrastructure, or even infrastructure debt, fits in well from that angle. We have an absolute return target, of beating inflation, so Infrastructure is ideal for performing that role.”

Shift to Active Strategies: Investors are leaning towards more active, tactical strategies like opportunistic (54% favor) and value-add (51% favor) infrastructure, rather than pure-play core/core-plus. This is driven by perceived crowding in core strategies and the desire for higher return potential and thematic relevance. For instance, family offices are “looking more at transitional infrastructure rather than a traditional toll road. People are getting more interested in data centers, fiber, solar panels.”

Generational Opportunity: Raj Rao of Global Infrastructure Partners (a part of BlackRock) believes we are entering “the golden age of private infrastructure investing.” He identified four key demand factors for infrastructure funding (energy transition, digital infrastructure/AI power, supply chain rewiring, aging infrastructure upgrades), estimating a need for nearly $100 trillion in capital, with a significant gap to be filled by private capital.

V. Partnerships: Filling Internal Expertise Gaps

Recognizing limitations in their internal capabilities, many family offices are seeking deeper, more collaborative partnerships with external experts rather than purely transactional relationships.

Significant Expertise Gaps: Over half of respondents identified gaps in their internal expertise across critical areas:

• Private market analytics (75%)
• Deal-sourcing (63%)
• Reporting (57%)

Demand for Specific Support: In private markets, family offices specifically value support for:

• Performance benchmarking (59%)
• Co-investment/direct deal sourcing opportunities (52%)
• Commitment pacing/cash flow modeling (44%)

Streamlining Relationships: Many are looking to consolidate their relationships with investment managers to gain clarity, control, and better understand performance attribution.

Outsourced CIO (OCIO) Model: Around one-quarter (22%) of family offices have used or would consider an OCIO, a figure unchanged from the 2023 survey. OCIOs offer benefits like strategic asset allocation, access to managers, and cost savings, though it requires giving up a degree of control. Scott Harris and Roberta Gamba of BlackRock highlight that OCIOs can provide not just investment partnership but also insights and connections beyond investments.

Partners for New Technologies: Family offices also rely on partners for expertise in managing new asset classes like crypto and integrating new technologies such as AI. A Latin American respondent expressed this need: “We try to learn as fast as we can and get up to date with things like AI and tech, but it’s not easy. So, we’re going to be reliant on partners and vendors for that technology-transition piece.”

VI. Artificial Intelligence (AI): Curiosity, Investment, but Slow Internal Adoption

Family offices recognize the transformative potential of AI but face significant barriers to broad internal adoption, instead focusing more on AI as an investment opportunity.

Barriers to Adoption: While curiosity exists, many family offices feel overwhelmed, underinformed, and uncertain about how to implement AI internally. Key barriers include:

• “Don’t know where to start” (61%)
• Privacy and data security concerns (47%)
• Lack of in-house AI expertise (44%)
• Concerned founders not on board (43%)
• Lack of transparency and interpretability in models.

Investment Focus: Family offices are far more likely to engage with AI through their portfolios:

• 51% are investing in opportunities that will benefit from the growth in AI.
• 45% are investing in tech firms building AI solutions.
• Only 33% are currently deploying AI technology internally to improve core investing processes.

Limited Internal Use Cases: For those using AI internally, the primary application is investment analytics (34%), including automating data consolidation and document processing. One respondent highlighted efficiency gains: “we replaced three days’ Excel slog per month with a 30-second AI script.” Other uses like investment manager due diligence and reporting (17%) are less common.

Future Potential: While robust AI-generated investment decisions are seen as a distant future, a strong majority would consider using AI for tasks like risk management and cash flow modeling. Jonathon Furer of Preqin noted that while private markets tech is rudimentary, 49% of family offices see AI as a competitive advantage, pushing larger firms to experiment with automation in underwriting and deal sourcing. Prerequisites for AI readiness include well-organized, integrated internal data.

In conclusion, family offices are adapting to a dynamic and uncertain investment landscape by significantly increasing their exposure to alternative assets, particularly private credit and infrastructure. They are strategically seeking external partnerships to compensate for internal expertise gaps and, while cautious about internal deployment, are actively investing in the broader AI ecosystem, anticipating its future impact on both markets and operations.