Family Offices in India Poised for Growth in AUM and Alternative Investments

Family Offices in India are set to see a 14% growth in Assets Under Management (AUM) and a 5% increase in alternative investments over the next three years, according to a report by Sundaram Alternates. The report underscores the shift from wealth preservation to growth, driven by active participation in startups and strategic diversification.

Family offices in India are projected to witness a 14% growth in their Asset Under Management (AUM) and a 5% boost in alternative investments over the next three years, a report by Sundaram Alternates revealed.

The AUM for mid to large-sized family offices in India is expected to grow at a Compound Annual Growth Rate (CAGR) of 14%, potentially increasing by 1.5 times over this period, as outlined in the report titled 'From Legacy to Leadership'.

This evolution marks a significant transition from wealth preservation to a growth-oriented approach, with Indian family offices increasing their allocations to alternative investments by a projected 5%, reaching 18% over the forthcoming years.

The report suggests that this trend aligns with global tendencies, where family offices invest more than 50% of their assets into alternatives. This pivot symbolizes a strategic move towards diversification, niche investment strategies, and active contribution to India's growth narrative, particularly through startups and innovative ventures.

Alternative Investment Funds (AIFs) are notably gaining favor among Indian family offices as they seek to tap into private markets and startup ecosystems. Offering a diversified portfolio that mitigates risks better than single investments, many family offices are now favoring co-investments with existing funds for high-conviction strategies with fewer operational challenges.

While the allocation to Mutual Funds, PMS, AIFs, and Gold is expected to see moderate growth, Fixed Income and Physical Real Estate are likely to decline. The allocation to startups is predicted to remain stable as family offices continue to find and leverage opportunities in this sector.

(With inputs from agencies.)