Indian family offices are on track for a robust 14% compound annual growth rate (CAGR) in assets under management (AUM) over the next three years, with a notable 5% increase in alternative investments. This growth trajectory highlights a significant shift from traditional wealth preservation to a more dynamic growth-focused strategy.
The latest report from Sundaram Alternates, "From Legacy to Leadership," underscores a substantial rise in adopting alternative investments among Indian family offices. Allocations to alternatives are projected to climb to 18%, reflecting a strategic move towards diversification and active participation in India’s thriving start-up sector and innovative ideas. This trend mirrors a global pattern where family offices typically allocate over 50% of their assets to alternative investments.
AIFs Gaining Popularity
Indian family offices are increasingly favouring Alternative Investment Funds (AIFs) as a key tool for accessing private markets and start-ups. AIFs offer a diversified portfolio that balances risk and return, attracting family offices to co-invest with existing funds and execute high-conviction strategies with reduced operational complexity. This growing preference is driven by the expertise of AIF managers in navigating the risk-return spectrum.
Vikaas M. Sachdeva, Managing Director of Sundaram Alternates, commented, “Family offices in India are at a pivotal juncture where integrating traditional values with modern investment strategies is driving significant growth. Our report highlights the critical importance of governance, diversification, and talent management in shaping the future of family offices. To thrive in this evolving landscape, it is essential for family offices to stay agile and forward-thinking, leveraging emerging opportunities to sustain their legacy across generations.”
The report also projects changes in asset allocations for Indian family offices over the next three years. Investments in mutual funds, Portfolio Management Services (PMS), AIFs, and gold are expected to see modest increases. Conversely, allocations to fixed income and physical real estate are anticipated to decline. Despite these shifts, investments in start-ups are likely to remain stable, as family offices continue to explore and capitalise on opportunities in this sector.
