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Goldman Sachs survey shows crypto losing its luster among family office investors

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(Kitco News) - Institutional family office investors aren’t sitting on cash in 2023, but they’re also less keen on crypto, according to a new survey from Goldman Sachs.

The 2023 Family Office Investment Insight Report surveyed 166 institutional family offices between Jan. 17 and Feb. 23, 2023. Of the respondents 57% were based in the Americas, with 21% in EMEA and 22% in the APAC region. Of the institutions surveyed 93% had a net worth of at least $500 million, with 72% having at least $1 billion AUM. The survey was directed at family office decision makers, usually the chief investment officer, and questions focused on their investment plans for the next 12 months.

According to the accompanying statement, these investors are “risk-on, increasing their allocations to public and private equities in particular, while modestly adding fixed income exposure to capture higher rate opportunities.”

The survey showed that family offices allocated on average 28% of their capital toward public market equities, 26% to private equity, 12% to cash and cash equivalents (excluding U.S. Treasuries), and 10% to fixed income investments. Also, 9% of their money was invested in private real estate and infrastructure, 6% in hedge funds, and 3% in private credit, with only 1% invested in commodities like precious metals.

“Family offices continue to carry meaningful allocations to alternatives, including private equity, private credit, infrastructure, real estate and hedge funds,” said Tony Pasquariello, Global Head of Hedge Fund Coverage and Co-Lead of One Goldman Sachs Family Office Initiative. He noted that in the 2021 survey, “In a comprehensive survey we conducted in 2021, 45% on average was allocated to alternatives, and “despite the challenges of 2022 […] that allocation was virtually unchanged at 44%.”

This appetite for alternative investments does not extend to crypto, however. The survey showed that while 26% of family offices are invested in cryptocurrencies in 2023, up from 16% in the 2021 survey, only 12% expressed potential future interest, a massive decline from the 45% who were looking to invest in crypto in 2021.

The long crypto winter and extreme market volatility of the past 18 months have also cooled their longer-term investment intentions, with 62% reporting being neither invested nor interested in crypto in the future, up sharply from 39% in the previous report.

While the tokens themselves have lost their luster, the broader digital assets ecosystem still has some appeal for family offices. 32% say they are invested in ‘digital assets,’ with the most-cited rationale being their “belief in the power of blockchain technology.”

Goldman Sachs continues to demonstrate their own belief in blockchain technology, announcing on Tuesday that they have joined with Digital Asset and other leading financial firms to launch the Canton Network, a privacy-enabled interoperable blockchain network designed for institutional assets.

The new network is designed to provide a decentralized infrastructure that connects independent applications built with Daml, Digital Asset’s smart-contract language.

“The Canton Network vision strives to enable seamless connectivity across various blockchain networks in the industry,” said Jens Hachmeister, Head of Issuer Services & New Digital Markets at Deutsche Börse Group. “Such solutions are a key building block for future digital and distributed financial market infrastructures.”

In addition to Goldman, Canton Network participants include BNP Paribas, Cboe Global Markets, Cumberland, Deloitte, Deutsche Börse Group, The Digital Dollar Project, EquiLend, Microsoft, Moody’s, Paxos, S&P Global, and SBI Digital Asset Holdings, among others.

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