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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for wealthy investors and consumers. Register to receive future editions, straight to your inbox.
Family offices have been investing more cautiously since President Donald Trump announced the tariffs in early April, according to a recent survey released by RBC Wealth Management and research firm Campden Wealth.
In a survey of 141 ultra-wealthy family investment firms in North America, the majority (52%) of respondents said cash and other liquid assets would provide the best returns over the next 12 months. More than 30% said artificial intelligence would deliver the best returns. Respondents could choose multiple answers.
In last year’s survey, growth stocks and defense industries were the most popular choices, each accounting for just under a third of respondents.
Family offices also lowered their expectations for returns for 2025, reporting an average expected portfolio return of 5% for the year, compared to 11% in 2024. Fifteen percent of respondents said they expected negative returns, while almost none had done so in the previous year. The most popular investment priority for 2025 was improving liquidity, selected by almost half of family offices. Last year, the top choice, at 34%, was portfolio diversification.
The survey was conducted from April to August. Bill Ringham of RBC Wealth Management said market disruptions driven by tariffs and geopolitical tensions played a “crucial role” in the poll’s downbeat results.
While U.S. markets have rebounded to record highs since the spring, family offices still have other reasons to be bearish. A whopping 52% of respondents cited US dollar depreciation as a likely market risk. THE dollar has fallen almost 9% since the start of the year and banks, including UBS, expect the depreciation to continue.
The slowdown in private equity and venture capital exits – a common complaint among family offices, according to the report – continues to drag on. Nearly a quarter of respondents said private equity funds have not achieved expected investment returns for 2025, and 15% said the same for direct private equity investments. Venture capital had the lowest net sentiment, with 33% of respondents reporting unsatisfactory returns.
That said, family offices are flocking to cash not only to mitigate risk but also to make opportunistic bets on the future, Ringham said.
“They have a much longer-term view of their legacy and their family,” said Ringham, who leads private wealth management strategies for RBC’s U.S. arm. “By doing this, they are likely creating the capital necessary to take advantage of opportunities as they see them present themselves in the market.”
This cautious optimism is reflected in the changes respondents envision in asset allocation, he said. Only a net 3% of family offices plan to increase their cash allocation, compared to 20% for direct private equity investments and 13% for private equity funds.
Investing in private markets is a necessity to create enough wealth to beat inflation and accommodate a growing family, Ringham said.
“When family offices put together portfolios, they’re obviously looking at time horizons that can last much longer than individuals who don’t have that type of inherited wealth. I mean, we’re looking at 100 to 100 years and beyond,” he said. “If you take a long-term view, even if you realize that private equity hasn’t performed very well over the last couple of years, it’s still an area where historical returns might have exceeded the returns you might find elsewhere.”