Where Family Offices See Investment Opportunities
Private credit and venture capital are all the rage among these ultra-secretive institutions.
There’s an old adage about family offices: No two are alike. But that doesn’t mean they aren’t eyeing similar opportunities.
Right now, many family office investors are keen on private credit, according to Charles Cho, investor relations director at Marathon Asset Management.
“This is the golden age of credit,” he said, noting that demand from his firm’s clients has shifted from hedge funds to private credit strategies. Cho spoke alongside three family office investors at a panel held at Fordham University on Wednesday.
Family office interest in private credit dovetails with a broader trend among institutional investors who, in an effort to manage the inflationary environment and rising interest rates, are putting capital to work in the asset class. Institutional Investor recently reported that more than half of institutions have already invested in private credit, and that 40 percent of those have plans to increase their investments in the next three years.
“The outlook for equities is maybe not as exciting,” Cho said. “It’s an attractive environment for credit generally and there’s going to be a lot to do.”
Like many family office investors, Brandon Laughren was early to private credit. Laughren is CIO of the Laughren Group, a family office set up after his father sold off his media business. Seven years ago, he began a collaborative project that’s paying off to this day.
Around 2016, Laughren teamed up with a family office that had a research arm to survey the private debt space. “We jointly diligenced 275 managers to do a deep dive on the asset class,” he said.
Collaboration is common among ultra-secretive family offices. Although they don’t tend to publicly reveal information about how they invest, they are willing to trade information with one another.
In this case, the team-up enabled the two allocators to take advantage of private credit before it got as hot as it is today. “The timing was perfect,” Laughren said.
Private credit isn’t the only area of the market where family office investors see opportunity.
Marcia Nelson, who is setting up a family office on behalf of billionaire Timur Turlov, said Turlov’s interests align with what many other families like to invest in: Series B and C venture funds. However, he’s a bit impatient, Nelson joked: Turlove hopes to allocate to funds that are ready to exit investments in 18 to 36 months, she added.
Given his background as the founder of a retail brokerage and bank that operates in Eastern Europe and Central Asia, Turlov is particularly interested in fintech. He is also eager to coinvest alongside other families, Nelson said.
Another speaker on the family office panel, Peter Lupoff, said he was more focused on impact investing. The founder of hedge fund firm Tiburon Capital Management, which was acquired by pension consultant Gray & Co in 2012, Lupoff has since set up a single family office called Lupoff/Stevens.
The fund primarily invests through managers, screening out oil and gas investments. While the office tends to work with larger managers, Lupoff said his team taps upstarts when possible. For instance, Lupoff was an early investor in Rethink Capital Partners — a food-focused impact firm that has been backed by larger managers.
The fund’s investment themes include wealth disparity, social inequality and justice, climate action, and financial inclusion. But that’s not to say Lupoff/Stevens avoids all sin stocks.
“I like casinos and booze, so we do that,” Lupoff joked.