Family offices in India are projected to see a 14% compound annual growth rate (CAGR) in assets under management (AUM) growth and a 5% increase in alternative investments over the next three years, according to a report titled “From Legacy to Leadership” by Sundaram Alternates.
The report said that AUM for mid- to large-sized family offices in India will potentially increase by 1.5 times over three years. It also highlights the significant evolution of family offices as they transition from wealth preservation to a growth-focused mindset.
The report also highlighted that the domestic family offices are increasingly embracing alternative investments, with a projected 5% increase in allocations to 18% over the next three years.
This aligns with a global trend, where family offices allocate more than 50% of their assets to alternatives. The shift reflects a strategic move toward diversification, niche investment strategies, and active participation in India’s growth story, particularly through start-ups and innovative ideas.
According to the report, alternative 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.
Vikaas M. Sachdeva, Managing Director of Sundaram Alternates, said, “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. As they navigate this complex landscape, it is crucial that they remain agile and forward-thinking to capitalise on emerging opportunities and sustain their legacy across generations.”
The 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 startups is expected to remain stable as family offices continue to explore and capitalise on opportunities in this sector.
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