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Family Offices in India Projected for 14% CAGR in AUM Growth and a 5% Increase in Alternative Investments Over the Next Three Years, Reports Sundaram Alternates A new report titled "From Legacy to Leadership," released by Sundaram Alternates, projects that the Assets Under Management (AUM) for mid to large-sized family offices in India will grow at a Compound Annual Growth Rate (CAGR) of 14% over the next three years, potentially increasing by 1.5 times. This report highlights the significant evolution of family offices as they transition from wealth preservation to a growth-focused mindset.

Strategic Asset Allocation Shifts: Family Offices Increase Alternative Investments by 5% -The report also notes that Indian 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 startups and innovative ideas.

AIFs Gain Traction as Family Offices Diversify into Private Markets - 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. 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, commented on the findings: "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 capitalize on emerging opportunities and sustain their legacy across generations."

Evolving Asset Allocations: Fixed Income Decreases While Alternatives and Gold See Increases

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 capitalize on opportunities in this sector.

Talent Retention and Governance: Key Challenges for Family Offices

Despite the promising growth and diversification, family offices face significant challenges in attracting and retaining talent, with over 55% of respondents citing this as a primary concern. The competition for talent with large wealth managers and asset managers is fierce, and family offices require specific skills such as understanding the family vision, aligning with the parent entity’s philosophy, and navigating complex family dynamics.

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