The Family Office Portfolio

Family offices and their portfolios are as unique as the families they serve. Their investment strategies reflect personal preferences, histories, and goals—some chase growth, others prioritize preservation, and most want a little of both. If you strip away the idiosyncrasies, you start to see patterns emerge, long term thinking, risk aversion, and diversification with some concentrated bets.

Big Picture Snapshot

According to a report from Cambridge Associates, in 2023 family offices managing $250MM+ in assets tend to allocate their investments as follows:

·        Public Equity: 32.1%

·        Private Equity & Venture Funds: 25.4%

·        Hedge Funds: 16.5%

·        Fixed Income: 10.2%

·        Real Assets: 5.6%

·        Cash & Other: 7.6%

·        Private Credit: 2.6%

At $250MM+ these are sizable investors that have access to high quality managers, a dedicated investment team and long-term horizon. This breakdown reflects a thoughtful balance between growth, income, and liquidity. It’s not a one-size-fits-all model, but it gives a framework to explore the typical characteristics of family office portfolios.

Why Most Portfolios Are Passive and Risk-Averse

Family offices often prioritize wealth preservation over aggressive growth. Here’s why:

·       Generational Thinking: Families don’t want their wealth to last 5 years, they want it to last 5 generations. This requires a focus on sustainability, not volatility.

·       Outsourcing Expertise: Passive investments rely on external investment professionals that can deliver in their area of expertise.

·       Capital Conservation: Many families have experienced wealth creation firsthand and know how hard it is to rebuild. The portfolio is designed to protect what’s already there.

This doesn’t mean family offices avoid risk entirely—but when they do take risks, it’s typically calculated and concentrated.

When Family Offices Do Take Risks

Risk in a family office portfolio often shows up in private investments, that the family & their internal team are familiar with. Why? These investments are:

·        Aligned with Expertise: The offices tend to take risks in industries they know intimately, either investment professionals coming in-house with direct experience or families staying in industries they know from what originally built wealth.

·        Strategic and Concentrated: Double down on select opportunities where value can be added, strategic relationships brought to the table and experience matters.

·        Long-Term Plays: Private investments align well with the patient capital mindset, tax planning and the ability to execute internal visions that can’t be met with outside investors.

Example: A family that built its wealth in real estate might allocate a disproportionate share of its portfolio to direct real estate investments or REITs. Similarly, a tech entrepreneur-turned-investor might back early-stage startups in AI or software. “Invest is what you know”

Why Family Offices Are Unique Investors

Family offices don’t fit neatly into traditional investment categories. They operate on longer time horizons, with fewer constraints than institutional investors and others that manage outside funds.

·        Fewer Stakeholders: Limited shareholders, that can act decisively and strategically that fully align incentives around long-term investment performance.

·        Customized Goals: The portfolio isn’t just about returns, it reflects the values of its shareholders, lifestyle, and legacy goals.

·        Relationship-Driven: Family offices often prioritize trust and relationships, whether it’s with fund managers, operators, or entrepreneurs.

Ridge Group Investments Overview

The family office I work for is a mix of the above, but fairly unique from what I’ve gathered talking to numerous other offices.

·       Values Driven – The reason why the family I work for has an office is because they are values driven. We exist because the family believes in a 4D Wealth investment thesis. If all we are doing is just making money, we are doing something wrong.

·       Direct Investments / In-House Expertise – Generation one built up the wealth in real estate, generation 2 has been doing early stage investing for 20 years. We put together a team with deep experience in private equity, venture capital and real estate. Because our values-driven thesis doesn’t align with the broader market, we make mostly direct investments, with in-house expertise that reflects our broader 4D Wealth thesis.

·       Diversification with Targeted Risk – We do have a substantial amount of the portfolio in safer, yielding real estate (expertise, risk aversion, preservation). We augment that with direct investments into private companies that have been in business for 5+ years with solid cash flows (expertise, concentrated low’ish risk). We push overall portfolio returns through direct, early-stage investments, with relatively a small portfolio allocation (expertise, concentrated risk).

Ridge Group Investments has been around for 5+ years and our portfolio is forming into a cohesive mix of preservation, with targeted appreciation investments. We haven’t seasoned everything enough to truly evaluate returns against the broader market, but early results are very promising. In the end, we adhere to all the same investment principles everyone else does, but we do it with slant to the values of the family and the team we’ve pulled together.

Final Thought

A family office portfolio is as much about philosophy as it is about strategy. The mix of public equities, private investments, and safe havens reflects a careful balance between growth and preservation, risk and caution, action and patience. Whether the focus is on wealth creation, preservation, or passing on a legacy, the normalized family office portfolio provides a blueprint for thoughtful, long-term investing.