Family Offices AUM growth projected at 14% over 3 years: Report

Family Offices in India projected for 14 per cent growth in Asset Under Management (AUM) and a 5 per cent increase in alternative investments over the next 3 years, a report said.

AUM for mid to large-sized family offices in India will grow at a Compound Annual Growth Rate (CAGR) of 14 per cent over the next three years, potentially increasing by 1.5 times, a report by Sundaram Alternates titled 'From Legacy to Leadership' said.

This report highlights the significant evolution of family offices as they transition from wealth preservation to a growth-focused mindset.

Indian family offices are increasingly embracing alternative investments, with a projected 5 per cent increase in allocations to 18 per cent over the next three years, it said.

This aligns with a global trend, where family offices allocate more than 50 per cent of their assets to alternatives, it said.

The shift reflects a strategic move toward diversification, niche investment strategies, and active participation in India's growth story, particularly through startups and innovative ideas, it said.

According to the report, Alternative Investment Funds (AIFs) are gaining traction among Indian family offices as a preferred tool for accessing private markets and startups, it said.

AIFs offer a diversified portfolio that mitigates risks compared to single investments, it said, adding, 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.

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, it said.

The allocation to startups is expected to remain stable as family offices continue to explore and capitalise on opportunities in this sector, it added.