Family Offices Explore Private Credit as Private Equity Returns Stall

Time for a family (office) meeting.

Amid global economic uncertainty and rising geopolitical tension, family offices are becoming more selective with their allocations, according to a new report from BlackRock. Additionally, private equity is heading to the backseat, while private credit and infrastructure are now riding shotgun. Though they tend to invest aggressively, family offices seem to be following the lead of typical wealth management firms, adding a little security to their strategies.

“Family offices are more focused on risk management, but it doesn’t mean they’re risk-off,” said Lili Forouraghi, head of Family Office, Healthcare, Endowment and Foundations for BlackRock. “They’re looking at portfolio construction and building more resilience.”

I (Kind of) Believe in America

Family offices’ main concerns right now are potential changes in tax policy, supply chain disruptions and accompanying inflation, and whether the Federal Reserve will cut interest rates, all of which have fueled the two most important trends in finance today — volatility and uncertainty — Forouraghi told Advisor Upside. 

“If we had done this survey more than a year ago, you would’ve seen very large allocations to the US, but now we’re seeing diversification into Europe and other regions,” she said.

Private Credit Reporting for Duty. Private equity still remains a core allocation for family offices, but sentiment is becoming mixed, the report found: 

• At some offices, PE makes up more than 50% of assets under management, and roughly a third of offices are bullish on the sector as they look toward 2026.
• Many offices, however, said PE comes with middling valuations, a lack of transparency and delays in returning capital. Nearly 75% of family offices said private market fees are too high.
• Roughly a third of family offices plan to increase their allocations to private credit and infrastructure like AI data centers in 2025-2026.

The shift away from private equity probably stems from a lack of dealmaking and initial public offerings in the space, which are the main ways PE investors realize gains, said Jason Kephart, a senior principal on Morningstar’s multi-asset strategy ratings team.

“Those types of activities have really slowed down since 2022,” he told Advisor Upside. “People are starting to get frustrated, and shift their eyes toward private credit, where you get monthly cash flows.”