How Much Should a Family Office Allocate to Private Markets?

It is one of the most common questions we receive: how much should we actually have here? The honest answer is that there is no universal right number. The correct allocation depends on the liquidity requirements of the office, the time horizon of the capital, the existing portfolio composition, and the quality of access available. What we can offer is a framework. 

Starting with Liquidity, Not Returns 

The right starting point is not 'how much return do we want?' but 'what is the maximum proportion of our portfolio that we can genuinely afford to lock up, in the worst case, for a decade?' Private markets capital should be treated as genuinely unavailable for the fund's expected life, typically 8–12 years for a closed-end structure. 

A family office with significant ongoing operating requirements or near-term generational transition should be considerably more conservative than an endowment-style vehicle with no near-term cash demands. The number that comes out of this analysis is the ceiling not the target. 

The right starting point is not 'how much return do we want?' it is 'how much can we genuinely afford to lock up for a decade?' 

Industry Context 

Global family office data shows private markets allocations ranging from less than 10% for smaller, more conservative offices to 30–40% for larger offices with long-established programmes and well-diversified vintage exposure. The trend is consistently upward, the number of family offices tracked by Preqin with private markets exposure has risen by over 500% since 2016. 

The Case for Vintage Diversification 

The single biggest structural mistake families make is concentrating in a single vintage, backing several funds launched in the same year, deploying capital into the same market environment, and facing the same exit environment simultaneously. A target allocation should be built over three to five years of consistent investing, not deployed in a single commitment cycle. 

The Primaries / Co-Investments / Secondaries Mix 

• Primaries - the foundation. Fund commitments to trusted GPs provide diversified vintage exposure. The lowest-risk way to build private markets exposure at scale. 

• Co-investments - the return accelerator. Direct investments alongside GPs offer higher potential return per dollar deployed. Well-selected co-investments can materially improve portfolio-level returns. 

• Secondaries - the liquidity manager. Purchases of LP interests provide faster deployment, more immediate portfolio visibility, and strategic flexibility. Also the tool for managing duration on the way out.