India's Family Offices Poised for 14% CAGR Growth, with Alternatives in Focus
Allocations to mutual funds, PMS, AIFs, and gold are expected to rise modestly, while fixed income and physical real estate may see a decline.
Family OfficesAlternative InvestmentsAifsPrivate EquityReal EstateReal EstateAug 28, 2024
\n\nThe report highlights that domestic family offices are increasingly embracing alternative investments, with allocations projected to increase by 5% to 18% over the next three years. This trend aligns with global family offices, which allocate over 50% of their assets to alternatives. The shift reflects a strategic move towards diversification, niche investment strategies, and active participation in India's growth story, particularly through start-ups and innovative ideas.
\n\nAlternative investment funds (AIFs) are gaining traction among Indian family offices as a preferred tool for accessing private markets and start-ups. AIFs offer a diversified portfolio that mitigates risks compared to single investments. The expertise provided by AIF 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.
\n\nAccording to Vikaas M. Sachdeva, Managing Director of Sundaram Alternates, 'Family offices in India are at a pivotal juncture where the integration of traditional values with modern investment strategies is driving significant growth. Our report underscores the importance of governance, diversification, and talent management in shaping the future of family offices.'
\n\nThe report details expected shifts in asset allocations for family offices over the next three years. Allocations to mutual funds, PMS, AIFs, and gold are anticipated to see modest increases, while fixed income and physical real estate are likely to experience a decrease. The allocation to start-ups is expected to remain stable as family offices continue to explore and capitalize on opportunities in this sector.
\n\nSundaram Alternates is a leading provider of alternative investment solutions in India, with a focus on private equity, real estate, and alternative investment funds. The company has a strong track record of delivering returns to its investors and has established itself as a trusted partner for family offices and institutional investors.
\n\nIn conclusion, India's family offices are poised for significant growth, driven by a shift towards alternative investments. As they navigate this complex landscape, it is crucial that they remain agile and forward-thinking to capitalize on emerging opportunities and sustain their legacy across generations.
Frequently Asked Questions
What is the projected growth rate for family offices in India?
14% compound annual growth rate (CAGR) over the next three years
What is driving the growth of alternative investments among family offices?
A strategic move towards diversification, niche investment strategies, and active participation in India's growth story
What is the expected shift in asset allocations for family offices over the next three years?
Modest increases in allocations to mutual funds, PMS, AIFs, and gold, while fixed income and physical real estate are likely to experience a decrease
What is the role of AIFs in alternative investments?
AIFs offer a diversified portfolio that mitigates risks compared to single investments and provide expertise in selecting opportunities across the risk-return spectrum
What is the importance of governance, diversification, and talent management in shaping the future of family offices?
These factors are crucial in driving significant growth and sustaining legacy across generations
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