Investor Caution Amid Trade Tensions

In March, family offices—private investment firms representing the ultra-wealthy—reduced their investment activities significantly. This decline coincided with the anticipation of new tariffs announced by President Donald Trump, which imposed a minimum 10% duty across a broad spectrum of imports, prompting many investors to reassess their strategies.

Significant Declines in Deal-Making

According to exclusive data from Fintrx, a private wealth intelligence platform, single-family offices engaged in just 40 direct investments in March. This marks a substantial drop of 45% compared to the same month in the previous year, as well as a 22% decrease from February, which was affected by its shorter month length.

Noteworthy Investments

Despite the overall decrease in deal-making, some family offices did make headlines with significant investments:

• Euclidean Capital: The family office of the late hedge fund manager Jim Simons made its first investment in months by participating in a $60 million funding round for Zeitview, a startup leveraging drone imagery and AI for infrastructure inspection.
• Dubai Holding: This investment conglomerate, backed by Dubai’s ruling family, completed its acquisition of Nord Anglia Education, valuing the private school operator at $14.5 billion, with participation from institutional investors like the Canada Pension Plan Investment Board.

Market Impact and Investor Sentiment

Industry experts, including Vicki Odette—partner at Haynes Boone—highlight that many family offices are taking a more deliberate approach amidst the uncertainty of the tariff policy. Investors are closely analyzing potential impacts on their portfolio companies and evaluating whether these businesses can maintain distributions or find successful exit strategies.

Odette notes that a cautious sentiment prevails, with many investors hesitant to deploy capital amidst fears that a trade war may adversely affect the operating businesses tied to their wealth. “There’s stress on both sides,” she remarked.

A Shift Toward Private Credit

Interestingly, there has been a notable increase in interest in private credit funds, particularly short-term loans. Odette suggests that family offices remain opportunistic, looking for potential investments even in a sluggish market environment.