Asset Allocation

Asset allocation is the division of a portfolio across major asset classes — equities, fixed income, alternatives, real assets, cash — chosen to balance return objectives against risk tolerance and liquidity needs. For UHNW families, allocation also reflects tax constraints, concentrated positions, and multi-generational time horizons.

Strategic asset allocation defines the long-term target weights; tactical allocation captures near-term shifts within agreed ranges. Most family offices set strategic allocation in the IPS and review it annually, with tactical decisions delegated to the investment team within bounds.

Family-office asset allocation differs from institutional allocation in important ways: tax drag is a major unmodelled cost in standard frameworks, concentrated single-stock or operating-business positions distort the rest of the portfolio, and the generational horizon often allows higher illiquidity tolerance than institutional benchmarks suggest.