Family offices managing an estimated $6 trillion globally have begun rotating material capital out of private equity and into private credit and infrastructure, according to a BlackRock survey of 387 single-family offices published this week. The median allocation to private equity fell 4.2 percentage points year-over-year, while private credit exposure rose 3.8 points and infrastructure climbed 2.1 points. The shift represents roughly $180 billion in redeployed capital across the surveyed cohort, the largest documented rotation since the post-financial-crisis rebalancing of 2019.
The move reflects mounting frustration with private equity fund performance and extended hold periods. Family offices reported median IRRs of 9.3% on PE commitments made between 2018 and 2021, trailing the 12.1% returns on comparable vintage private credit positions. More than 62% of respondents cited "lack of exit discipline" as a primary concern, with the average holding period for PE stakes now stretching beyond 7.2 years, up from 5.4 years in 2019. Valuation markdowns in tech-heavy growth equity funds compounded dissatisfaction, particularly among offices with vintage-2021 commitments that remain underwater. One chief investment officer at a West Coast family office managing $4.2 billion noted that three of their five largest PE positions have yet to provide capital calls or distributions after five years, creating what he termed "dead equity."
The capital is flowing toward senior-secured private credit, where family offices see both yield and control advantages. Direct lending funds offering 9% to 11% net returns with quarterly distributions have absorbed the bulk of redeployed capital, according to survey data. Infrastructure assets, particularly in energy transition and data center build-outs, attracted the remainder, with family offices favoring co-investment structures that bypass traditional fund fees. The rotation also reflects generational handoffs: 41% of surveyed offices reported that next-generation family members, typically aged 28 to 45, pushed for higher current income and greater transparency in fee structures. These younger decision-makers, many of whom experienced the 2008 crisis and the pandemic drawdown, display lower tolerance for J-curve dynamics and opaque fund accounting.
Allocators should monitor three follow-on developments. First, private equity general partners face mounting pressure to accelerate exit timelines or offer continuation vehicles, with secondary market activity likely to spike in Q3 and Q4 2025 as GPs attempt to retain family office LPs. Second, private credit managers are raising larger pools of capital and will likely face spread compression by mid-2026 if the current inflow rate persists. Third, family offices increasing direct co-investments will require enhanced operational infrastructure, creating demand for third-party deal-sourcing platforms and independent valuation services.
The BlackRock data aligns with Goldman Sachs research released two weeks prior, which found that family offices held 18.7% in cash equivalents as of Q1 2025, the highest level since 2020, signaling that this rotation may still be in early innings. The surveyed cohort's median age is 63 years, suggesting that asset-liability matching and income generation will continue to outweigh growth-at-any-cost strategies. Private equity funds dependent on family office LPs for 15% or more of their capital base should expect re-up rates to decline sharply at the next vintage.