The strategic pivot by family offices toward private credit and infrastructure represents a significant shift in the investment landscape, driven by a confluence of macroeconomic factors, regulatory changes, and evolving market dynamics. This trend is not merely a fleeting response to short-term market conditions but a calculated long-term strategy aimed at optimizing returns, mitigating risks, and capitalizing on emerging opportunities.
The Decline of Private Equity’s Appeal
Private equity (PE) has long been a cornerstone of alternative investments for family offices, offering access to high-growth companies before they go public. However, recent years have seen a notable decline in the attractiveness of PE investments. According to data from BlackRock and KKR, deal and exit values have stagnated, except in certain regions like the Asia-Pacific. This stagnation has been compounded by sky-high valuations, limited liquidity, and a backlog of “dry powder”—capital that has been raised but remains uninvested due to a lack of attractive opportunities.
The macroeconomic environment has further exacerbated these challenges. Persistent inflation, volatile public markets, and geopolitical uncertainty have made it increasingly difficult for PE firms to deliver the high returns that once made them so appealing. As a result, family offices are increasingly looking for alternative asset classes that can provide stable income, inflation protection, and diversification.
The Rise of Private Credit
Private credit has emerged as a compelling alternative to traditional PE investments. Over one-third of family offices surveyed by BlackRock plan to increase their allocations to private credit in 2025 and beyond. This asset class has matured significantly in recent years, evolving from a niche market dominated by specialist hedge funds to a mainstream investment option.
One of the key drivers of the rise of private credit is the retreat of traditional banks from certain lending markets. Regulatory constraints and risk aversion have led banks to reduce their exposure to mid-sized companies and real assets, creating a financing gap that private lenders have been quick to fill. Private credit investments often take the form of loans with floating rates, which allow investors to capture a premium over public bond markets while benefiting from negotiated terms and tailored covenants.
The senior-secured nature of private credit investments provides an additional layer of downside protection, making them an attractive option in a world wary of recession and credit shocks. According to BlackRock’s 2025 Global Family Office Survey, some family offices are now allocating up to 42% of their portfolios to private credit, reflecting the growing confidence in this asset class.
Infrastructure: A Safe Haven with Growth Potential
Infrastructure investments have long been viewed as a safe haven, offering stable cash flows and inflation protection. However, the recent surge in interest from family offices is driven by more than just defensive considerations. Over 30% of family offices polled expect to increase their allocations to infrastructure in the upcoming investment cycles, reflecting a growing recognition of the long-term growth potential of this asset class.
The global push towards net-zero emissions, the rise of artificial intelligence, and population-driven urbanization are all creating persistent demand for new infrastructure. Family offices are increasingly viewing infrastructure as a growth play, critical to the digital transformation and new economic paradigms. The exponential rise of AI and cloud computing, in particular, is driving massive new investment in data centers, energy grids, and subsea cables.
Infrastructure investments also offer an illiquidity premium, rewarding long-term investors with higher yields for their patience and commitment. This makes them a staple for capital that is not in need of fast turnover. The global race to net-zero emissions, AI’s voracious energy and data demands, and population-driven urbanization all create persistent need for new infrastructure. Family offices view these assets as not just defensive, but aligned with secular growth.
The Broader Context: Flight to Alternatives
The migration toward private credit and infrastructure is part of a wider trend: an ongoing exodus from public equities and cash. Family offices have lifted their average allocation to alternative assets to over 40%, and for some, over half. Public markets have lost their luster due to volatility, while rising interest rates and geopolitical uncertainty have made diversification more urgent.
Private markets overall promise lower correlation to traditional asset classes, higher yield, and—at least theoretically—reduced volatility. However, these benefits come with their own set of challenges, including illiquidity, complex due diligence, and valuation discrepancies. Family offices must therefore brace for an environment where picking the right managers, understanding underlying assets, and negotiating strong covenants are paramount.
Risks and Trade-Offs
No investment strategy is without its risks, and the shift toward private credit and infrastructure is no exception. As more capital flows into these asset classes, concerns are building about overcrowding, which may compress returns and narrow the yield premium that made these assets so enticing. Illiquidity is another significant risk, as private markets lack the liquidity of public markets, making it difficult to exit investments quickly in volatile times.
Complexity and governance are also major considerations. Private credit and infrastructure investments require specialized due diligence, as they are not assets that can be tracked off a Bloomberg chart. Instead, they involve projects and credits that require hands-on oversight, legal fluency, and familiarity with regulatory pitfalls. Valuation discrepancies are another risk, as methods for marking these loans or infrastructure equity stakes to market are far less precise than for public securities, risking hidden losses.
Looking Ahead
The aggressive tilt toward private credit and infrastructure shows no sign of slowing for now. Ultra-wealthy investors, with their appetite for yield and long cycles of capital, are prepared to weather illiquidity and complexity. However, as more money chases these themes, those who bring real expertise, patience, and a willingness to hunt beyond the obvious will likely outperform.
The competitive landscape is intensifying, with asset managers, insurers, pension funds, and even sovereign wealth funds jostling alongside family offices for the best private credit opportunities and infrastructure pipelines. Family offices must therefore remain agile and opportunistic, leveraging their independence and long-term perspective to navigate this evolving landscape.
Conclusion
The strategic pivot by family offices toward private credit and infrastructure is more than a passing phase—it’s a bold reset. Private credit and infrastructure have earned their place at the top of alternative allocations, offering stable yield, inflation protection, and a chance to ride structural megatrends. Yet this evolution isn’t without growing pains: excess competition, unfamiliar risks, and new operational demands will test even the most sophisticated investors.
The family office playbook for 2025 and beyond is being written in real time, and as the world’s economic and technological engines shift gears, their bets on “alternatives” are fast becoming the new mainstream. For families seeking to safeguard and compound generational wealth, the challenge and the opportunity are the same: look past the headlines and surface trends, get hands-on with strategy and execution, and never underestimate the speed with which the next tide may roll in.
