India’s family offices are on track for substantial growth in the coming years, with their collective assets under management (AUM) projected to surge by 50% to $45 billion by 2026. This prediction comes from Sundaram Alternate Assets (SAAL), a prominent player in the Alternative Investment Funds (AIFs) space. Currently, an estimated 300 family offices in India manage a combined AUM of $30 billion. These offices act as wealth managers for ultra-high net-worth individuals (UHNWI) and their families, defined as those with investable assets exceeding $30 million. Globally, the family office landscape is even larger, with 10,500 offices overseeing over $6 trillion in assets.
SAAL’s report, released on Wednesday, highlights a significant trend in investment allocation. While Indian family offices traditionally favor mutual funds, this preference is expected to shift slightly towards alternative investments in the next three years. AIF investments are projected to see a 5% increase, while allocations to mutual funds, Portfolio Management Services (PMS), direct equity, and gold are predicted to experience marginal growth of 1%. In contrast, investments in fixed income and physical real estate are projected to decline by 8% and 3%, respectively, over the same period.
Vikaas M Sachdeva, managing director of Sundaram Alternates, attributes this shift to a growing preference for alternative investment strategies. He explains, “We believe there is a shift happening away from conventional fixed income products like mutual funds (due to indexation benefits going away) to newer avenues such as asset allocation strategies, private credit, and venture debt. On the real estate front, there is a sizeable investment happening through vehicles like AIFs, which offer options like residential, commercial, warehousing, credit instead of just direct investing.”
Looking further ahead, Sachdeva anticipates that over the next five years, family offices will increasingly focus their investments in public markets, particularly in sectors such as technology, financial services, healthcare, and manufacturing.
