Family Office Asset Allocation
Family office asset allocation is how a family office distributes capital across asset classes to match the family’s goals, liquidity needs, and risk tolerance.
Allocator relevance: Explains which strategies are in-scope, how pacing works, and what mandate constraints matter for fit.
Expanded Definition
Family office allocation is often shaped by family priorities: capital preservation vs growth, liquidity needs, concentration in an operating business, tax considerations, and values/impact goals. Compared to institutions, allocation can be more flexible but also more idiosyncratic.
Some family offices implement formal target weights and rebalancing; others operate with looser “sleeves” and opportunistic investments guided by the CIO or principal.
How It Works in Practice
Offices set allocation posture via IPS-like policies or principal directives, then implement through public portfolios, private funds, direct deals, and co-investments. Commitment pacing and liquidity budgets become central when private exposure grows.
Decision Authority and Governance
Allocation decisions may be controlled by the principal, CIO, or IC. Governance strength determines whether allocation is stable or reactive to headlines and recent performance.
Common Misconceptions
- Family offices always over-allocate to privates.
- Allocation is purely return-driven.
- Family offices ignore liquidity constraints.
Key Takeaways
- Allocation is shaped by family objectives and constraints.
- Governance maturity determines stability and discipline.
- Allocation posture is a key input for mandate fit.