By Abby Schultz

Family offices, which manage money for the ultrawealthy, are embracing private equity, with some 40% seeing PE as a "core component" of their strategies in the next two years, according to a new study from investment bank Bastiat Partners and PE firm Kharis Capital.

Family offices invest in private markets through direct stakes in companies, funds, and co-investments with PE firms. The PE trend aligns with a September survey from Campden Wealth and RBC Wealth Management, in which family offices said PE and venture capital offered the best long-term risk-adjusted returns, followed by stocks. Some 42% expect more private exposure this year, while 19% see adding exposure to stocks.

Developed-market stocks returned 17.8% on average for family offices last year, notes Campden, compared with 11% for direct PE investments and 7% for PE funds. But, says Bastiat Managing Partner Nader Afshar, public-market outperformance "can sometimes be an indicator that private markets, which tend to lag behind by a few months or more -- particularly in less efficient asset classes -- may soon follow suit." Long-term strategies, he says, are a "natural fit for patient capital like family offices."

Bastiat and Kharis also explore more-nuanced trends. Among them: Families thwarted by lack of initial public offerings and M&A have turned to "continuation funds," which allow PE firms to provide liquidity for exiting investors.

Write to Abby Schultz at abby.schultz@barrons.com

Last Week

Markets

A high-stress week dawned, with an Election Day and a Federal Reserve policy meeting. Donald Trump swept to a big victory, sending the dollar, bank stocks, Tesla, and indexes soaring. Bitcoin hit a new high. Treasury yields surged. Oil prices dipped, after rising on OPEC+'s decision to keep production cuts through December. On Wednesday, the Fed cut rates by 0.25%. Trump trades slipped as the week ended, but the Dow was up a whopping 4.6%; the S&P 500, 4.7%; and the Nasdaq Composite, 5.7%.

Companies

Boeing workers approved a new pay package and ended their strike. Warren Buffett continued to sell Apple shares, booking $97 billion in gains and boosting Berkshire Hathaway's cash pile to $325 billion. Nvidia replaced Intel in the 30-stock Dow and edged out Apple for the world's biggest market cap; Sherwin Williams replaced Dow, the company, not the index. Qualcomm saw profit nearly double and offered a bullish outlook, and hope for iPhone sales.

Deals

The Financial Times reported that BlackRock was in early talks to take an equity stake in hedge fund Millennium Management...Franchise Group, which owns the Vitamin Shoppe and Pet Supply Plus chains, filed for Chapter 11. Franchise is embroiled in a federal probe into its founder's ties to a major shareholder, investment bank B. Riley...Restaurant chain TGI Fridays also declared bankruptcy...Artificial-intelligence start-up Perplexity tripled its valuation to $9 billion in a new funding round.

Next Week

Monday, 11/11

Bond markets are closed on Monday in observance of Veterans Day. Equity markets will keep regular hours.

Wednesday, 11/13

The Bureau of Labor Statistics releases the October consumer price index on Wednesday. Economists surveyed by FactSet see the overall index accelerating slightly to 2.5% year over year, compared with 2.4% in September. The bureau releases the producer price index on Thursday. Economists project the gauge to rise 2.3% year over year in October, compared with 1.8% in September.

Thursday 11/14

Earnings season keeps chugging along with Walt Disney headlining the week's results on Thursday. Investors will seek updates on the Disney+ streaming service and parks division, and monitor new developments in CEO Bob Iger's succession plan. Disney announced in October that it will target 2026 to find his replacement.

Friday 11/15

The Census Bureau reports retail sales data for October on Friday. Earlier in the week, home-improvement store Home Depot and e-commerce platform Shopify, used by many retailers, release results.

The Numbers

$1.4 T

Size of China's newest fiscal stimulus plan, aimed mostly at shoring up indebted local governments.

$67 B

Rystad Energy forecast for the global transformer market in 2030, up from $48 billion in 2024.

$3.4 T

Market capitalization of Nvidia this past week, passing Apple as the world's most valuable company.

$64 B

Gains made by world's 10 richest people on Wednesday's stock surge. Elon Musk was up $26.5 billion.

Write to Robert Teitelman at bob.teitelman@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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November 08, 2024 19:53 ET (00:53 GMT)

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