Chennai: Alternative Investment Funds (AIFs) player Sundaram Alternate Assets (SAAL) has projected that the Assets under Management (AUM) of family offices in India will jump by 50% at $45 billion over the next three years.
Currently, about 300 family offices in India are estimated to have a cumulative AUM of $30 billion. These family offices manage wealth of ultra-high networth individuals (UHNWI) and their families, classified as those having networth of more than $30 million in investable assets.Globally, there are 10,500 family offices with a collective AUM of more than $6 trillion.
In a report released on Wednesday, the company said, Indian family offices predominantly allocate their financial assets to mutual funds. While investments in AIF will increase by 5% in the next three years, allocations in mutual funds, Portfolio Management Services (PMS), direct equity and gold will grow marginally by 1%. Investments in sectors such as fixed income and physical real estate will reduce by 8% and 3%, respectively during the same period, it added.
“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,” said Vikaas M Sachdeva, managing director, Sundaram Alternates. Over the next five years, family offices are likely to invest in public markets such as technology, financial services, healthcare and manufacturing, he added.
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Sundaram Alternate Assets predicts a 50% jump in the assets managed by Indian family offices, reaching $45 billion over the next three years. Currently, 300 family offices manage $30 billion. A shift is observed from mutual funds to alternative investments like private credit and asset allocation strategies.
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