Family offices fear dollar depreciation, lower returns in wake of tariffs

A version of this article originally appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to high-net-worth investors and consumers. become a member to receive future editions straight to your inbox.

Family offices have been investing more cautiously since President Donald Trump’s tariff announcement in early April, according to a recently released survey by RBC Wealth Management and research firm Campden Wealth.

In the survey of 141 investment firms owned by ultra-wealthy families in North America, the majority of respondents (52%) said cash and other liquid assets would offer the best returns over the next 12 months. More than 30 percent said AI would provide the best return. Participants were able to select more than one answer.

In last year’s survey, growth equities and defense industries were the most popular choices, each accounting for less than a third of respondents.

Family offices also lowered their 2025 return expectations, reporting that the average expected portfolio return for the year fell to 5% from 11% in 2024. While 15 percent of respondents said they expected negative returns, almost none expected this the previous year. The most popular investment priority for 2025 was increasing liquidity, chosen by almost half of family offices. Last year’s biggest choice was portfolio diversification with 34%.

The survey was conducted from April to August. RBC Asset Management’s Bill Ringham said market turmoil and geopolitical tensions caused by tariffs played a “significant role” in the pessimistic survey results.

While U.S. markets have soared to record highs since the spring, family offices still have other reasons to be bearish. 52 percent of survey respondents cited US dollar depreciation as a possible market risk. dollar has fallen by nearly 9% since the beginning of the year, including banks UBS We expect the depreciation to continue.

According to the report, the slowdown in private equity and venture capital outflows, a common complaint of family offices, continues. Almost a quarter of survey respondents said private equity funds did not meet expected investment returns for 2025, while 15% said the same for private equity direct investments. Venture capital had the lowest net sensitivity; 33% of participants reported inadequate returns.

However, Ringham said family offices are flocking to cash not only to reduce risk but also to make opportunistic bets on the future.

“They have a much longer vision of their legacy and their family,” said Ringham, who manages private wealth strategies for RBC’s U.S. arm. “By doing this, they are likely creating capital to take advantage of the opportunities they see in the market.”

This cautious optimism can be seen in participants’ intended asset allocation changes, he said. Only a net 3% of family offices plan to increase their allocation to cash and liquid assets; This rate is 20% for direct private equity investments and 13% for private equity funds.

Ringham said investing in private markets is a must to beat inflation and create enough wealth to accommodate a growing family.

“As family offices put together portfolios, they’re looking at time horizons that can last much longer than individuals who don’t have that kind of inherited wealth. So, we’re looking at 100 years to 100 years,” he said. “If you take a long-term view, even if you recognize that private equity hasn’t done that well over the last few years, this is still a place where historical returns may have exceeded the returns you might find elsewhere.”