How Family Offices Invest Differently in Private Markets

In private markets there is a somewhat cliched view that there is a bifurcation between large, more conservative institutional LPs and family offices, which are nimble and opportunistic. How much, though, do these stereotypes play out when looking at the investment behaviour of these two groups of LPs? In our latest LP Allocation Snapshot, we have analysed IPEM's proprietary data set of more than 900 investors to answer this question.

The results seem to bear out the assertion that all cliches are truisms, as family offices and institutional LPs in the IPEM universe approach private markets allocations in a markedly different way, and clear variations emerge between single and multi-family offices.

Four key themes stand out from the data:

SFO Opportunism 
Single family offices demonstrate a more opportunistic investment approach than peers, placing equal weight on consistency and absolute performance where peers emphasise consistency as the top factor when selecting funds. This opportunism comes out in the appetite for smaller funds and North America, a region that is falling out of favour with institutional investors, and in preference for deal types, where more SFOs invest in co-investments and directs than other group.

MFO Market Coverage 
Multi-family offices emerge as the most active allocators, with 96% investing in private equity. This group reports the highest appetite across all asset classes and strategies, reflecting their need to service diverse client mandates.

Sophisticated Strategy Appetite 
Family offices are building sophisticated programmes beyond primary funds. SFOs and MFOs show significantly higher participation in direct deals (53 and 51% vs 29% for institutions), niche credit strategies including special situations and speciality finance, and independent sponsor transactions.

Secondaries Interest 
There is substantially stronger appetite for secondaries among family offices compared with their institutional counterparts across all asset classes. In private equity, more than three quarters of MFOs and half of SFOs allocate to the strategy where 40% of institutional investors are allocating.

The data confirms that the stereotype holds true: single-family offices operate with greater opportunism than institutional investors, favouring direct deals, co-investments, and secondaries, as well as focusing on performance and co-investment access over traditional GP metrics in fund selection. Multi-family offices bridge the gap between SFOs and institutions, with broader market coverage, high levels of appetite across strategies, and a focus on returns consistency and fees when choosing funds.