How US family offices are navigating a turbulent market
min readKey takeaways
- US family offices have entered 2026 with significantly reduced return expectations, reflecting deep caution amid tariff-driven volatility and geopolitical uncertainty.
- The threat of a global trade war has become the dominant investment risk, prompting a reassessment of portfolio positioning and risk management.
- Despite short-term nerves, structural confidence in the US remains intact, with family offices maintaining their long-term strategic allocations whilst making tactical adjustments.
- The dominant investment posture is one of "cautious conviction", combining defensive short-term measures with sustained medium-term belief in US markets.
The mood has shifted, but not the strategy
The sentiment at the start of 2025 was markedly different from the bullish optimism of the previous year. North American family offices entered the year with significantly reduced return expectations, a shift heavily influenced by extreme market volatility during the second quarter, when tariff announcements triggered sharp equity sell-offs before an equally dramatic recovery. This kind of whipsaw environment raises practical questions around investment mandate drafting; the triggers built into portfolio management agreements and the extent to which family office governance frameworks are robust enough to prevent reactive decision-making during periods of stress.
Tariffs, trade wars and the wall of worry
The prospect of a global trade war has emerged as the single most significant threat to family office financial objectives. North American family offices have specifically identified the associated risks as constraints on global growth, a domestic inflation shock and depreciation of the US dollar. Looking further ahead, excessive government borrowing and the disruption of global trade from onshoring of supply chains are seen as the most likely risks crystallizing over a medium-term horizon.
The US administration's 'America First' philosophy has made the free movement of capital more challenging. While this may benefit patient capital, those seeking certainty over shorter time horizons have increasingly looked for opportunities elsewhere. What has emerged is not a single directional shift but rather a bifurcation into cautious short-term positioning alongside sustained medium-term conviction. From a structuring perspective, this bifurcation demands flexibility, with families needing vehicles that can accommodate both defensive hedging and opportunistic deployment without triggering adverse tax or regulatory consequences.
Staying the course through volatility
Characteristically, family offices have shown no sign of abandoning their strategic asset allocations in response to the turbulence. Their allocations are designed for all weathers, to build and preserve wealth through generations. The percentage of family offices pursuing a growth strategy has declined notably since 2024, with a corresponding shift in favor of wealth preservation and improved liquidity.
This shift has direct implications for the drafting of investment policy statements, partnership agreements and fund documentation. Liquidity preferences, in particular, need to be reflected in redemption provisions, lock-up periods and the terms on which capital can be recalled or redistributed across structures. The Q2 2025 market drawdown and recovery served as a salutary reminder that those who panic-sold during the downturn often locked in losses, whilst those who stayed the course were rewarded when the market recovered, underlining the importance of well-drafted governance provisions that prevent short-termism.
