New York, NY – Ultra-high-net-worth family offices significantly increased their allocations to public equities in the second quarter of 2025, marking the largest surge in several years, while concurrently reducing their exposure to private market investments, including real estate and private credit. This strategic pivot, revealed by the latest CNBC Family Office Portfolio Tracker powered by Addepar, underscores a growing bullish sentiment towards the burgeoning artificial intelligence (AI) trade and public stock markets, even as concerns about market concentration persist. The shift indicates a proactive approach by some of the world’s most sophisticated investors to capitalize on prevailing market trends, moving away from less liquid assets that have faced valuation headwinds.
The Great Reallocation: A Deep Dive into Portfolio Shifts
The aggregate data from hundreds of single family offices, collectively managing over $1.4 trillion in assets, shows a notable increase in public stock holdings from 34% in the first quarter to 37% in the second quarter of 2025. This 3-percentage point jump represents a significant reorientation within these highly exclusive portfolios. The data, unique in its aggregation of actual portfolio holdings rather than survey responses, offers an unprecedented real-time glimpse into the investment strategies of the ultra-wealthy. Eric Poirier, CEO of Addepar, highlighted the magnitude of this shift, stating, "I’d read it as family offices are more comfortable being more highly allocated to public equities. The increase in public equities was the biggest quarter-on-quarter shift that we’ve seen over the course of the last three, four years." This comfort suggests a sustained belief in the growth potential of public markets, particularly in sectors driving innovation.
The corresponding reduction in private market allocations—encompassing private companies, real estate, private equity, venture capital, and private credit—saw a parallel 3-percentage point decline. Furthermore, family offices slightly drew down their cash reserves by less than 1 percentage point, signaling a strategic intent to deploy capital more actively into what they perceive as opportunistic areas. This simultaneous movement out of less liquid assets and into public equities, coupled with a reduction in cash, paints a clear picture of active portfolio management aimed at enhancing returns in a dynamic economic landscape.
Bullish on the AI Frontier: Public Equities Ascendant
The primary catalyst for this increased allocation to public equities appears to be the robust and accelerating "AI trade." As companies at the forefront of AI development continue to demonstrate groundbreaking advancements and significant revenue potential, investor enthusiasm has translated into substantial market capitalization growth. Family offices, renowned for their long-term perspectives and ability to identify nascent trends, are clearly positioning themselves to benefit from this technological revolution. The S&P 500’s impressive rally of approximately 15% during the second quarter of 2025 played a crucial role in amplifying the value of these stock holdings. While market fluctuations largely accounted for the gains rather than aggressive new buying, the decision by family offices not to rebalance away from these appreciated assets indicates a strong, long-term bullish tilt towards equities.
"The AI thematic bet is getting so much action and so much activity, and it’s being expressed in large part in public markets versus private markets," Poirier observed. This suggests that the immediate, high-growth opportunities within AI are more readily accessible and scalable through publicly traded companies. The concentration of wealth managers on these specific growth areas is further evidenced by the top five most commonly held stocks by family offices: Microsoft, owned by 77% of family offices; Amazon and Alphabet, each held by 76%; Apple, with 70%; and Nvidia, a pure-play AI leader, held by 69%. These tech giants, often referred to as the "Magnificent Seven" or similar monikers, have been instrumental in driving broader market performance and continue to attract significant capital due to their innovation pipelines, market dominance, and robust financial performance. Their diversified revenue streams, combined with their heavy investments in AI research and development, make them attractive vehicles for capturing the AI growth story.
This focus on a relatively small number of highly concentrated technology stocks raises questions about portfolio diversification, yet family offices appear comfortable with this strategy, viewing the long-term growth prospects of these companies as outweighing the concentration risk. It also challenges the traditional notion that ultra-wealthy investors exclusively seek out exotic, illiquid alternative investments over "retail-friendly" public stocks. In an environment where innovation is rapidly reshaping industries, liquidity and direct exposure to market leaders are proving to be powerful draws.
The Retreat from Private Markets: Valuation Challenges Emerge
While public equities soared, private market allocations experienced their largest drop in years, falling from 49% to 46% of family office portfolios. This decline was not primarily driven by active divestment but rather by significant markdowns in the valuations of private assets. The most pronounced impact was felt in private credit funds, where 18% of recent vintage funds (those established in 2020 or later) posted markdowns in net asset values (NAV). This figure stands in stark contrast to the historical average of 9% for private credit funds with vintages of 2016 or later over their first four years.
This surge in markdowns in private credit can be attributed to several factors. The sustained period of higher interest rates has increased borrowing costs for private companies, leading to greater financial strain and, in some cases, higher default rates. Lenders in the private credit space, who often provide financing to companies that might not qualify for traditional bank loans, are now reassessing the creditworthiness of their portfolios. The illiquidity premium, historically a key driver of returns in private credit, may also be diminishing as public credit markets offer increasingly attractive yields.
Beyond private credit, real estate and venture capital funds also experienced markdowns, as confirmed by Eric Poirier. The commercial real estate sector, in particular, has faced significant headwinds due to changing work patterns (remote and hybrid work models), rising vacancy rates, and increased financing costs. Venture capital, while still vital for early-stage innovation, has seen a recalibration of valuations following the frothy markets of 2021-2022, with investors now demanding clearer paths to profitability and sustainable growth. "We’re not actually seeing changes in inflows or outflows," Poirier clarified, emphasizing that the reduction in private market allocations was predominantly a function of valuation adjustments rather than family offices actively selling off their holdings. This distinction is crucial, suggesting that while the market is reassessing private asset values, family offices are generally holding onto these investments, perhaps anticipating a future rebound or recognizing the long-term strategic value of these illiquid stakes.
Cash and Other Holdings: Strategic Deployment and Stability
Amidst the significant shifts in public and private market allocations, other segments of family office portfolios remained relatively stable. Fixed income holdings held steady at 8%, reflecting a cautious approach to interest rate volatility and a desire for capital preservation. Hedge funds maintained their 7% allocation, indicating a consistent role for these strategies in providing diversification and absolute returns. "Other alts," a category encompassing commodities, collectibles, and other niche investments, also held firm at 6%.
Significantly, after public equities, private companies represented the largest investment segment for family offices, accounting for 15% of their portfolios. This underscores the continued importance of direct private investments for the ultra-wealthy, who often seek strategic stakes in innovative businesses or opportunities for significant value creation through active ownership. The slight drawdown in cash, less than 1 percentage point, suggests that family offices are not hoarding liquidity but rather strategically deploying it into areas they believe offer the best risk-adjusted returns, primarily public equities in the current environment. This contrasts with periods of extreme uncertainty when cash allocations often surge as investors seek safe havens.
The Significance of Family Office Trends: Broader Market Implications
The investment patterns of family offices are often viewed as bellwethers for broader market trends among sophisticated investors. Their substantial capital, long investment horizons, and access to exclusive opportunities position them as influential players. The collective move into public equities and the AI sector, in particular, signals a powerful endorsement of this technological wave. It suggests that despite concerns about market concentration and potential bubbles, these savvy investors are confident in the sustained growth trajectory of the leading AI innovators.
This trend could have several implications. It may encourage other institutional investors to re-evaluate their own allocations, potentially driving further capital into the public tech sector. Conversely, the continued pressure on private market valuations, particularly in private credit and real estate, could signal a more protracted period of adjustment for these asset classes. Investment managers catering to ultra-high-net-worth individuals will need to adapt their strategies to align with these evolving preferences, emphasizing public market opportunities and demonstrating robust due diligence for any remaining private market exposures. The willingness of family offices to let their public equity allocations grow without aggressive rebalancing also suggests a long-term conviction that the current market leaders will continue to outperform, potentially leading to further market bifurcation between high-growth tech and more traditional sectors.
Looking Ahead: Interest Rates and the Fixed Income Horizon
As family offices look towards the third quarter of 2025, the dynamic interest rate environment and its impact on the fixed income world are expected to be key themes. "The rates environment, the fixed income world is very dynamic right now," Poirier noted, indicating that this sector will warrant close monitoring. Central bank policies, inflation trajectories, and geopolitical developments will all play a role in shaping bond yields and fixed income strategies.
A sustained period of higher-for-longer interest rates could continue to exert pressure on private market valuations, especially for highly leveraged companies or those with long-duration assets like certain real estate holdings. Conversely, attractive yields in public fixed income could draw more capital into bonds, offering a compelling alternative to equities for risk-averse investors. Family offices, with their flexibility and sophisticated analytical capabilities, are well-positioned to navigate these complexities, potentially adjusting their fixed income allocations to capture opportunities in a volatile rate environment. The balance between growth-oriented public equities and defensive fixed income will be a critical decision point for these portfolios in the coming months.
Methodology and Data Integrity: A Unique Perspective
The CNBC Family Office Portfolio Tracker, powered by Addepar, distinguishes itself by providing insights derived from actual aggregated and anonymized portfolio data, rather than relying on surveys that can sometimes reflect intentions more than actual holdings. This methodology offers a more precise and reliable understanding of investment trends among single family offices. With data representing over $1.4 trillion in assets across hundreds of family offices globally, the tracker offers a statistically robust and highly representative sample of ultra-wealthy investment behavior. This granular, real-time data allows for a more accurate assessment of how these influential investors are truly allocating capital, providing valuable intelligence for financial professionals, market analysts, and policymakers alike.
In conclusion, the second quarter of 2025 witnessed a significant and intentional pivot by family offices towards public equities, largely fueled by the transformative potential of artificial intelligence. This shift, characterized by a substantial increase in stock holdings and a corresponding reduction in private market exposure due to valuation adjustments, underscores a dynamic investment landscape where liquidity and direct access to innovation are prized. While private markets grapple with recalibrated valuations, family offices are expressing a long-term bullish conviction in public market leaders, setting a compelling precedent for sophisticated capital allocation in an era defined by technological advancement and evolving economic realities. The unfolding narrative in interest rates and fixed income will undoubtedly shape their strategies as they navigate the remainder of the year.
