How family office investment in private markets is changing
According to Alexandre Monnier at CitiGroup, the pendulum has swung "back a little bit" towards fund investments in part because direct investing requires “quite a bit of expertise” (AP/Seth Wenig)
As competition for family office capital intensifies, private market managers are increasingly seeking to turn fund investors into long-term strategic partners. Many wealthy families now view fund commitments as a strategic tool for building relationships with managers, accessing co-investment opportunities and diversifying across sectors, geographies and risk profiles.
Family offices often see private market funds as a way to build deeper manager relationships and access co-investment opportunities, explains Alexandre Monnier, global head of family office advisory at Citi Family Office Group.
"We actually see some of them ... investing in the funds, knowing that in some ways it's the price to pay to then have access to the co-investments and wanting to take the relationship to a higher level," Monnier explains.
"We see many family offices — those who are deploying significant amounts of capital and can be good clients of a certain scale — co-investing with some of these [private capital] firms."
Preference for direct investing?
Monnier, who advises clients across all regions, explains that 80 per cent of Citi's family office clients are direct investors in private equity, given many have accumulated their wealth as first-generation business creators.
As long-term investors, family offices can afford to hold stakes in private businesses for decades, with most viewing their "main competitive advantage" as the ability to deploy patient capital, says Monnier. "That's also why they have a high tolerance for illiquidity."
The strategy also enables successful entrepreneurs to take a hands-on approach in investments, bringing sector expertise and board-level oversight. This can make wealthy families attractive investors in other family-owned businesses seeking a liquidity event, as founders often value the prospect of long-term stewardship rather than a rapid exit.
According to Citi Wealth's 2025 global family office report, part of the appeal of direct investments reflects a somewhat risk-on attitude among investors, with family offices showing the greatest interest in growth-stage (52 per cent) and early-stage ventures (37 per cent).
By contrast, private equity funds typically hold portfolio companies for four to seven years. Traditional closed-end funds require investors to redeploy returned capital and manage any tax consequences arising from realised gains.
However, the growth of continuation vehicles is beginning to challenge the traditional fund ownership model. Continuation vehicles allow managers to retain so-called star assets for longer, making fund investments more attractive for family offices.
Benjamin Baumann, Mercer's global head of secondaries, says continuation vehicles are "evolving into a durable, institutionalised segment of the private markets ecosystem". In 2025, he explains, fund transaction volumes in the secondary market grew by more than two-fifths (41 per cent).
Indeed, Goldman Sachs found in its 2025 report on family office growth that three-quarters of family offices (72 per cent) had expressed interest in secondary fund investments.
Goldman's report adds that large endowments "publicly selling" private equity stakes "represents a unique opportunity for family offices to add high-quality exposure at attractive pricing".
Fund diversification advantages
Monnier says the pendulum has swung "back a little bit" towards fund investments, in part because, "doing direct investing at the end of the day requires quite a bit of expertise in [a particular] industry".
Due diligence can be easier in sectors where wealthy single-family office investors understand a business, though it's "really hard to do across the board", Monnier affirms.
Ensuring adequate sector diversification in a private equity portfolio can increase the appeal of fund investments.
Monnier explains: "Picture that you've created your wealth in healthcare, for example, and you might still have an operating business."
"You probably know the industry inside out, you know the suppliers, you know the distributors, you have people coming to you with deals, you can do the due diligence [in that sector] because you're very familiar with the industry and probably can make good sound direct investments."
By contrast, he points to the pitfalls of attempting to make direct investments without having all the necessary expertise. This is when funds "suddenly become very appealing again", he says.
Geographic diversification is also crucial in an era of fragmenting global geopolitical relationships. "[With] a sense of social unrest also in different parts of the world ... we're increasingly hearing family offices talk about having ... a 'Plan B' for their assets," Monnier says.
Family offices are eager to invest in businesses that are headquartered close to the investment teams, so they can take a hands-on role in direct investments. Monnier points to a family office that "drew a radius around their family office" and would focus on investing in companies they could "drive to and drive back home in the same day".
“We’re increasingly hearing family offices talk about having ... a ‘Plan B’ for their assets”
This allows family office staff to "visit the facilities, meet the team, [and] show up at meetings in person".
Internationalisation of assets
Further afield, fund investments abroad allow family offices to tap into managers' expertise on local legal, tax and regulatory requirements.
"If the family offices [are based] in the US, they understand US laws. They understand the players in the industry locally if they're going to invest in the US. But [they're] not going to do direct deals in Singapore."
However, a growing number of family offices are opening bases further afield to build closer relationships with local private equity general partners and other families making direct investments.
"We're seeing some family offices start to open satellite offices, with the goal of having a presence in different markets," Monnier says. He points to a UK-based family office that has opened a small satellite office in Singapore, with two investment staff sent there to network with family offices locally and source direct investment opportunities in the wider south-east Asia region.
Indeed, according to Citi Wealth, almost three-fifths (57 per cent) of family offices view their organisations as international, given the mix of assets they hold. However, a third of families (32 per cent) do not describe themselves as international.
Internationalisation is becoming increasingly common, with Monnier noting that family offices are now able to establish a global presence in a way that "wasn't seen, I would say, even five years ago".