Some periodic reports and studies are more informative and enjoyable than others. As far as I’m concerned, you can skip the obligatory and meaningless outlooks for the coming calendar year. I prefer to look at what investors are actually doing, rather than the usual December round-up, much of which is already outdated before the new year even begins.
One example of the alternative studies I enjoy reading is the Global Family Office Report by asset manager UBS. The most important chart from the report—this time from the 2025 edition—is shown below.
It presents the strategic asset mix that family offices maintained over the past year—on average, of course. At least on paper, family offices are less locked into the traditional 60/40 thinking than, say, asset managers, who have built their entire business model around just two investment categories: stocks and bonds. That’s also why the outlooks—which I usually don’t bother with—are filled with endless variations of equities (regions, sectors, small caps) and bonds (developed, emerging, credit, high yield, and so on). After all, all their funds need to be featured.
Family offices don’t have that constraint. Plus, there are always a few family members with considerable persuasive power who don’t ignore the strategic mix. In theory, this means they could be ahead of the crowd.
Herd mentality
But unfortunately, that’s a bit disappointing. What emerges—year after year—is that family offices are also highly susceptible to marketing messages. Globally, they have allocated 21 percent to private equity. That’s because all the brochures claim this category offers both high returns and lower risk than stocks. But there are plenty of compelling reasons to question both assumptions.
The amount of money flowing into private equity—including from family offices—has exploded over the past ten years. The simple result is that a huge amount of money is chasing a limited number of highly attractive investments. At the aggregate level, this inevitably means that more and more money ends up in less attractive opportunities.
Over the past two years, private equity funds have increasingly made headlines for the wrong reasons. Not just because interest rates have risen, or because money simply isn’t being distributed, but also due to the sector’s questionable valuation methods. Among the critics now are regulators, whose statistics departments quickly discovered that smoothing returns might look great in a sales pitch but doesn’t fairly represent the true risk-return profile of private equity. Recently, I’ve started adding a simple question: why do you think so many private equity and fund firms are so eager to democratize this asset class?
Lacking
Another consistent observation each year is the minimal allocation to real assets—or more specifically, scarce assets, in my view. Commodities, for instance, qualify as real assets but aren’t intrinsically scarce.
The combined weight of art, collectibles, and gold is just 3 percent. And that’s after the gold allocation has doubled compared to a year ago. Most likely, this wasn’t an active decision, but rather the result of gold’s fantastic performance—measured in euros, dollars, and yen—combined with yet another disastrous year for bonds.
This means that even though family offices have slightly moved away from the 60/40 model (51 percent in equities if you exclude listed real estate, and 30 percent in bonds including cash), they are far from optimally leveraging the diversification benefits of the broader investment universe. Let alone that their portfolios reflect the rapid shifts in the financial system, such as the status of the dollar, endless debt accumulation, structural geopolitical tensions, and elevated inflation risks.
To truly appreciate and actively utilize the power of the available investment universe, you need to take a step back. I understand that’s difficult with all the social events, golf days, padel clinics, sports outings, and marketing that also reach the family office executives—but with this column, I’d be happy to give you a hand.
Jeroen Blokland analyzes striking, timely charts on financial markets and macroeconomics in his newsletter The Market Routine. He is also the manager of the Blokland Smart Multi-Asset Fund, which invests in stocks, gold, and bitcoin.