Family Offices Shift toward Fixed Income Vehicles and Real Estate

​John Hofmann is a Wilmette, IL, professional who guides commercial real estate activities at KeyBank Real Estate Capital in Chicago. Professionally, John Hofmann seeks to understand potential risks and rewards across various property types, sectors, and investors, such as family offices.

Family offices have begun re-strategizing within an uncertain economy and moving toward property investments. The 2023 UBS Global Family Office Report, released in May, indicates higher interest rates and less liquidity driving the shifts. Allocations in traditional asset classes have fallen while alternative options have slightly risen, not accounting for changes from private equity to fixed-income holdings. With yields on short-term fixed-income investments exceeding five percent, they provide solid returns and superior liquidity.

At the same time, direct private equity exposure has decreased from 24 to 14 percent, while hedge fund allocations have risen from four to seven percent. Moving forward, active rather than passive investment management strategies have become the norm. Over one-third of the family offices surveyed, representing $500 billion in net worth, have plans to increase real estate exposure as valuations trend lower and capital grows more readily available.

John Hofmann, Wilmette

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