Family offices love those alternatives. Unfortunately, the alternative is a wide field that includes active long/short investing and private equity. There is a lot of room for differences across families, but what is clear is that wealthy families do not like cash, equities, or credit as direct investments.
Cash offers too low a return even with current rates above 5%. Equity beta is not what these investors want and credit seems too risky at this time and there may not be a need for current income. This allocation is very different from pensions who have long-term liabilities and foundations who want to grow return to meet long-term plan needs.
There are clear risks here; liquidity being the major issue, but families can take a long-term view and think about generational wealth and downside risk from a long-term perspective.
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