Family offices are pulling capital out of traditional private equity buyout funds at the fastest pace in more than a decade, redirecting nearly half their portfolios into alternative investments that prioritise downside protection and shorter holding periods over blind commitments to multi-year funds. According to the UBS Global Family Office Report 2026, which surveyed 307 family offices with an average net worth of $2.7 billion and average assets under management of $1.3 billion, alternatives now represent 42% of total portfolios. That figure marks the continuation of a structural shift away from public markets and, more tellingly, away from the private equity model that dominated institutional allocations through the 2010s.
The headline finding from UBS is not the absolute level of alternatives exposure but the velocity of planned change. Sixty percent of family offices told the bank they plan to alter their strategic asset allocation in the next twelve months, up sharply from 35% a year earlier. UBS called the result the largest planned reallocation it has ever recorded in more than a decade of running the survey. The trigger was not a single event but a convergence of stretched public equity valuations, a weaker dollar outlook, credit market jitters following the First Brands bankruptcy that rattled private credit investors in late 2025, and a generational wealth transfer estimated by UBS at $83 trillion moving from older family patriarchs and matriarchs to heirs over the coming decades.
Private equity allocations among family offices fell from 22% of portfolios in 2023 to 21% in 2024, and are planned to drop to 17% in the 2026 cycle, according to UBS data reported by Modus News. That five-percentage-point retreat in three years represents a significant retrenchment from what used to be the flagship alternative asset class for this investor cohort. The capital is not returning to public markets. Instead, it is flowing into private credit, hedge funds, real estate, and secondaries—strategies that offer different risk-return profiles and, in many cases, more predictable cash flows and shorter durations than traditional buyout funds.
The shift is most pronounced in Europe, where private credit exposure among family offices doubled from 2% to 4% of portfolios, with targets rising to 5% to 6% by the end of the year, according to a Dakota analysis pulling from Goldman Sachs and UBS 2025-26 data. The share of European family offices with zero private credit exposure fell from 36% to 26%, indicating a meaningful number of investors moving from outright avoidance to active allocation in roughly a year. Secondary market participation—family offices buying existing limited partner stakes in private equity or venture funds from other investors seeking liquidity—rose to 72% of European family offices from 60% in 2023.
Secondaries transactions are not small trades. Dakota's data shows family offices buying into these stakes at discounts of 15% to 25% below net asset value, the reported fair value of the fund's holdings. The appeal is straightforward: investors pay 75 to 85 cents for a dollar of assets that have already been vetted, already have a track record, and often carry a shorter remaining hold period than a brand-new fund commitment. The secondary market effectively allows family offices to skip the blind-pool risk and J-curve drag that characterise primary fund commitments, while still accessing private market returns at a structural discount.
The allocation velocity this cycle matters more than the headline percentages, and the family offices quietly rotating into secondaries at NAV discounts are the ones still passing on the obvious trades, family office advisor Jaf Glazer has argued.
North American family offices show similar patterns, albeit with different absolute allocation levels. Campden Wealth's 2025 research with RBC Wealth Management put private markets—combining private equity, venture capital, and private credit—at 29% of the average family office portfolio, down slightly from 30% the prior year. JPMorgan Private Bank's 2026 Global Family Office Report placed total private investments even higher, at 30.8%, and flagged private credit specifically as the fastest-growing sub-allocation inside that bucket. The data sets differ in sample size and regional weighting, but the directional conclusion is consistent: the private equity buyout model is losing share to credit and secondary strategies that promise steadier cash flow and better downside protection.
Mark O'Hare, who built Preqin into the dominant data provider for private markets before selling it to BlackRock and now runs Valhalla Ventures, a newer-money family office, has put roughly 70% of his capital outside public markets, concentrated in secondaries and private credit rather than traditional buyout funds. O'Hare spent decades studying exactly how private market returns actually play out across thousands of funds, not just the top-quartile winners that dominate conference discussions. His allocation choices carry weight precisely because they come from someone with front-row access to Preqin's own data on fund dispersion—the gap between the best-performing private equity funds and the rest.
The portfolio construction implicit in the UBS data and in allocators like O'Hare suggests a shift in risk appetite that extends beyond individual asset classes. Family offices are moving away from strategies that require long lock-ups and offer no interim liquidity, and toward structures that provide some combination of yield, shorter duration, or secondary-market optionality. That preference is showing up not just in credit and secondaries allocations, but also in the types of private equity funds being selected. Funds offering co-investment rights, more frequent distribution schedules, or exposure to sectors with clearer exit timelines are gaining favour over traditional blind-pool buyout vehicles with ten-year lock-ups and capital calls spread across the first four years.
The broader implication is that family offices are pricing in a bumpier macro environment and a longer period of elevated interest rates than the market consensus of a year ago anticipated. Alternatives at 42% of the portfolio is not a tactical trade. It is a structural bet that public equity multiples will compress, that access to liquidity will matter more than it has in the past decade, and that private market strategies offering downside protection or discounted entry points will outperform levered buyouts in a world where the cost of capital is no longer negligible. The UBS survey does not predict where markets are headed, but it does show where the wealthiest capital pools are positioning before those markets arrive.