What's Happening?
Family offices in North America are shifting their investment strategies in response to concerns over dollar depreciation and the impact of tariffs announced by President Trump. According to a survey conducted
by RBC Wealth Management and Campden Wealth, 52% of the 141 surveyed investment firms of ultra-wealthy families believe cash and other liquid assets will yield the best returns over the next year. This marks a shift from the previous year's preference for growth equities and defense industries. The survey, conducted from April through August, also revealed that family offices have lowered their expected portfolio returns for 2025 to an average of 5%, down from 11% in 2024. The most popular investment priority for 2025 is improving liquidity, chosen by nearly half of the respondents.
Why It's Important?
The shift in investment strategies by family offices highlights the broader economic concerns stemming from geopolitical tensions and tariff policies. The preference for cash and liquid assets suggests a cautious approach amid market volatility and uncertainty about future economic conditions. This trend could influence broader investment patterns, potentially affecting sectors that previously attracted significant capital, such as growth equities and defense industries. The lowered expectations for portfolio returns also indicate a more conservative outlook on economic growth, which could impact financial markets and investment flows. As family offices manage substantial wealth, their strategies can have ripple effects across various industries and the economy.
What's Next?
Family offices are likely to continue monitoring economic indicators and geopolitical developments closely to adjust their strategies accordingly. The focus on liquidity suggests that these investors are preparing for potential market disruptions or opportunities that may arise from economic shifts. As the impact of tariffs and dollar depreciation unfolds, family offices may further diversify their portfolios or explore alternative investments to mitigate risks. The ongoing evaluation of investment priorities will be crucial in navigating the uncertain economic landscape.
