Family Offices Are Quietly Pulling Back From Private Credit — Here's Why That Matters

This article summarizes recent portfolio data for informational purposes. It is not investment advice.

Key Takeaways

• Family offices are making a bullish bet on public stocks, according to CNBC's Family Office Portfolio Tracker with Addepar — while simultaneously cutting their private markets allocation, which fell to 46% from 49% in the second quarter of 2026, the largest quarterly drop in years.
• Addepar attributes the private-markets pullback mainly to private credit funds marking down the value of their assets, not to a broad flight from alternatives generally.
• 18% of private credit funds from the 2020-or-later vintage have posted net asset value markdowns — twice the roughly 9% average markdown rate seen in private credit funds from 2016 or later through their first four years.
• This shift is happening at the same time Fitch Ratings reported private credit defaults hit a record 6% in 2026 and a Financial Stability Board report warned about the sector's opacity — meaning some of the market's most sophisticated investors appear to be responding directly to exactly the stress signals regulators have been flagging.
• The Addepar data reflects actual portfolio holdings — more than $1.4 trillion in aggregated, anonymized assets — rather than the self-reported survey responses most family office research relies on, giving this shift a different, arguably more reliable evidentiary basis.

What makes this data different from most family office research

Most publicly available research on how family offices invest comes from surveys — UBS, J.P. Morgan, and Knight Frank each publish widely cited annual reports based on asking family office principals what they're doing or planning to do. The CNBC Family Office Portfolio Tracker, built in partnership with wealth management software firm Addepar, works differently: it reflects actual, aggregated, and anonymized portfolio holdings across hundreds of family offices, representing more than $1.4 trillion in total assets. Addepar CEO Eric Poirier described the distinction directly: family offices are widely watched as "an important indicator of how sophisticated investors are approaching their strategic and tactical asset allocation," and real portfolio data — rather than stated intentions — offers a more direct read on what these investors are actually doing with their capital, not just what they say they plan to do.

That distinction matters for the specific finding at the center of this data: family offices are simultaneously making a bullish bet on public equities while pulling back meaningfully from private markets — a real, executed portfolio shift, not a stated intention from a survey response.

The specific number, and what's driving it

Family office allocations to alternative investments — private equity, private credit, venture capital, and similar private-market assets — fell to 46% of total portfolios in the second quarter of 2026, down from 49% the prior quarter. According to Addepar's own analysis, that's the largest quarterly drop in years for this metric. Critically, Addepar attributes the decline mainly to one specific cause: private credit funds marking down the value of their underlying assets, not a broad rotation away from alternative investments as a category.

The scale of those markdowns is concrete and specific: 18% of private credit funds from the 2020-or-later vintage — meaning funds that began investing relatively recently — have posted net asset value markdowns. That compares with an average markdown rate of roughly 9% across private credit funds from 2016 or later, measured through their first four years of operation. In other words, funds launched more recently are experiencing markdowns at roughly twice the historical rate seen in the years before them — a specific, measurable signal that something about the current private credit environment is producing more writedowns than the asset class has historically generated at a comparable stage in a fund's life.

Why this lines up directly with broader private credit stress signals

This shift doesn't exist in isolation — it's consistent with, and arguably a direct market response to, several other private credit stress indicators that have surfaced in 2026. Fitch Ratings reported the private credit default rate reached a record 6% through the second quarter of 2026. Separately, a Federal Reserve Bank of Boston analysis found rising use of payment-in-kind arrangements (where borrowers pay interest with more debt rather than cash) across business development company portfolios, even as lending spreads narrowed — a combination researchers described as investors "being paid less to take on more risk." And in May 2026, the Financial Stability Board — an international regulatory body — published a formal warning about private credit's complexity, opacity, and growing interconnection with the broader financial system.

Family offices pulling back specifically from private credit, rather than alternatives broadly, at the same moment all three of those independent signals were surfacing, suggests some of the market's most sophisticated private investors are responding directly and specifically to documented credit-quality deterioration in this particular asset class — not making a broad, undifferentiated retreat from private markets generally. That's a meaningfully different read than a simple "investors are getting more cautious" narrative: the data points to targeted repositioning within alternatives, informed by real, fund-level performance data, rather than general risk-off sentiment.

Why family offices were so heavily allocated to private markets in the first place

Understanding the significance of a pullback requires understanding how large the prior allocation was. Multiple large-scale surveys — including J.P. Morgan's 2026 Global Family Office Report and Knight Frank's Wealth Report — describe family offices allocating roughly 35% to 40% of their portfolios to private and alternative investments as a matter of standard strategy, reflecting these investors' distinctive approach: multi-generational capital preservation, extreme diversification, and — notably — less need for the daily liquidity that constrains many institutional investors, since family offices are typically managing permanent capital rather than capital that needs to be readily redeemable. A separate Institutional Investor survey found 34% of family offices dedicating more than 40% of their total allocations specifically to private investments like private equity or venture capital.

That structural preference for illiquid, long-horizon private investments is precisely why a meaningful pullback — even a relatively modest-looking three-percentage-point quarterly decline — is a notable data point. Family offices are, as a category, among the investors best positioned to tolerate private-market illiquidity and volatility; their retreat from a specific sub-asset-class within that space is a more significant signal than the same move would be from an investor type with less structural tolerance for illiquidity in the first place.

What this means if you're evaluating private credit exposure in your own portfolio

• Distinguish fund vintage when evaluating any private credit investment. The data shows a meaningful difference in markdown rates between funds launched in 2020 or later and the broader historical average — vintage-specific performance data is a more useful diagnostic than treating "private credit" as a single uniform asset class with consistent historical returns.
• Recognize that sophisticated, well-resourced investors are actively repositioning, not just expressing caution in surveys. Unlike stated-intention survey data, this reflects executed portfolio changes from investors with access to detailed, fund-level performance information — a meaningfully stronger signal than sentiment data alone.
• Understand this as a private-credit-specific shift, not a signal to avoid private markets broadly. Addepar's own analysis attributes the pullback specifically to private credit markdowns, not to declining conviction in private equity, venture capital, or other alternative asset categories — a business or investor evaluating private market exposure broadly shouldn't necessarily generalize this specific finding across the entire asset class.
• Treat this alongside the broader private credit stress signals as a converging, not isolated, data point. Combined with record default rates and formal regulatory warnings covered separately, this represents a third independent line of evidence pointing toward genuine private credit stress in 2026 — three different types of sources (a ratings agency, an international regulator, and now real investor portfolio data) reaching a broadly consistent conclusion strengthens the overall signal considerably.

Frequently Asked Questions

Does this mean family offices are pulling money out of the stock market's alternative to keep more in cash? No — the data specifically shows family offices making what CNBC's coverage describes as "a bullish bet on the stock market," meaning the capital moving out of private credit is going toward public equities, not sitting in cash or being withdrawn from investment entirely.

Is an 18% markdown rate for 2020-or-later private credit funds unusually high? Based on the comparison data available, yes — it's roughly double the approximately 9% average markdown rate for private credit funds from 2016 or later measured over a comparable early-life period, indicating funds launched more recently are experiencing writedowns at a notably higher rate than the asset class's own recent historical pattern.

Why do family offices typically hold such a large allocation to private markets compared with other investor types? Family offices generally manage permanent, multi-generational capital rather than capital that needs to remain readily accessible, which reduces their need for the liquidity that constrains many institutional investors — a structural advantage that has historically made private markets' illiquidity premium more attractive and more tolerable for this investor category specifically.

How does this relate to the broader private credit stress signals covered elsewhere? This data point is consistent with, and complements, separate reporting on record private credit default rates (Fitch Ratings) and formal regulatory concern about the sector (the Financial Stability Board) — together, these represent three independent types of evidence (fund-level portfolio data, ratings-agency default tracking, and international regulatory analysis) converging on a similar conclusion about current private credit market conditions.

Sources & References

• CNBC, "Family offices are making a bullish bet on the stock market, according to CNBC Family Office Portfolio Tracker" (August 27, 2026)
• J.P. Morgan Private Bank, "2026 Global Family Office Report"
• Knight Frank, "The Wealth Report: Our Family Office Survey 2026"
• Institutional Investor, "Family Offices Plan to Shift More Money Into Private Markets"

Related Reading

For the broader market and regulatory context behind this shift, see PrimeWorldMedia's coverage of private credit's record default rate and its expansion into retail investor products — this family office data offers a real-world, portfolio-level confirmation of the same stress signals covered there.