Goldman's Sara Naison-Tarajano works with many of the richest families in the world. By Abby Schultz

Sara Naison-Tarajano wears numerous hats at Goldman Sachs, where she works with many of the richest families in the world. A Goldman partner, she is global head of private wealth management capital markets, and Goldman Sachs Apex, which brings investment deals to client families. She is also co-head of One Goldman Sachs Family Office Initiative, addressing the needs of large family offices across the firm's businesses. And, she runs the Goldman Sachs Partner Family Office for top executives of the firm.

Naison-Tarajano, who says that all of her roles "sort of connect," has been at Goldman for 26 years, since joining the firm's analyst program right out of college.

Goldman has surveyed professionals running the family offices of the uber-rich, two-thirds of which have assets of $1 billion or more, biennially since 2021, to glean insights into what drives their investment priorities and outlook. She recently spoke with Barron's about the results of the latest survey, released on Sept. 10, which indicate a family-office preference for equities, alternative assets, and gold -- but not crypto.

An edited version of the conversation follows.

Barron's : Let's start with the basics. What is a family office?

Sara Naison-Tarajano: A family office is an entity or structure created to manage significant capital amassed by an individual. It can be structured as a limited liability corporation or a C corporation, or in some other way. There were many family offices incorporated after 2010 because of the increase in capital-markets activity and wealth creation around the globe. People want to put infrastructure and governance around that capital. If you don't have a plan, it's difficult for that capital to live on for generations and support your mission and that of the next generation.

What sort of investment opportunities do you bring to families through Apex?

Private placements tend to line up with family-office objectives for high returns. These are capital investments in companies sometimes made years ahead of a company going public. Companies are waiting [longer] to go public than in the past. Companies that came public in 2014 were 6.7 years old, on average. Today, the average IPO is for a company nearly 11 years old. That means there is more money to be made on these so-called capital raises along the way.

Goldman led the first private fund-raising round for Moderna, and co-led the company's initial public offering in 2018. That was a huge success for private investors, given the post-IPO valuation. [Moderna raised $2.6 billion in the private market; the IPO valued the company at $7.5 billion.] We had family offices investing alongside institutions. A decade earlier, the investor base would have been purely institutional.

A more recent example is CoreWeave, the artificial-intelligence cloud company, which came public in March. A number of our family-office clients participated in the fund raising ahead of the public offering. We were also involved in the recent purchase of the Boston Celtics. [The National Basketball Association team was purchased in August by an investor group with which Goldman worked.] Building a consortium of family offices to do things like buy a sports team is something we have done many times.

Is there a large appetite for dealmaking among family offices?

Yes. Many people with family offices made their money as entrepreneurs, starting companies. They tend to have comfort with illiquidity and, in some cases, single-asset risk. Goldman's most recent survey of family offices across the world found that they had a 42% allocation to alternative assets [private equity, hedge funds, and real estate]. In the U.S., that number was 46%.

Family offices are risk-on. It isn't that they don't explore hedging their positions, because they do. But when you're investing for generations, you worry less about market cycles. They have focused, at least in the private space, on trying to find companies with business models that could work for the long term.

Are your family-office clients active in public markets, as well?

Interest in public markets is higher today than in the past 18 months. Barring some sort of outside shock, it doesn't look like the economy is heading into a recession. There is an awareness that if you are going to grow your capital and not lose wealth over time, you have to beat inflation. In rolling 20-year periods over the past 100 years, the S&P 500 index has outperformed inflation 100% of the time.

Equity markets have risen about 50% in the past two years. If markets correct, our clients will use the opportunity to invest more. In April, when the stock market fell sharply on President Donald Trump's tariff announcement, clients took the opportunity to invest more in private and public assets.

What can other investors learn from the family offices you work with?

These families have stayed true to their asset allocation over time. They make changes at the margin, when warranted. For example, in fixed income they were heavily invested in shorter-duration securities in 2023. Now, the majority of their fixed-income allocation is in securities with a duration of three years-plus, which makes sense when interest rates are expected to come down. But they aren't changing their overall allocation to fixed income.

For U.S. investors, in particular, it's expensive to change an asset allocation significantly because of tax considerations. If you sell something at a profit, you have to fund the tax hit and then earn it back in the new assets in which you invest.

Family offices are thoughtful about their liquidity needs. That's another takeaway. And, they have outsize allocations to alternative assets, which are becoming increasingly available to individual investors through various vehicles.

Retail investors need to understand the liquidity provisions of these investments, and may be best served by using professional asset managers to manage and diversify their portfolios. But given some of the trends we have talked about -- companies staying private for longer, fewer public companies than in the past -- there is a place for alternative assets in retail portfolios.

Which public-market sectors interest wealthy families most?

We have seen a significant increase in family-office investment in technology. Some 58% of survey respondents said they are planning to overweight technology in the next 12 months. That is 15% higher than just two years ago. We have also seen a focus on energy, given the power required to fuel the AI revolution. Healthcare has become an area of focus, as well. Some families want to be at the forefront of innovations that may cure diseases and change the way we live.

More than a quarter of the families you surveyed anticipated overweighting financial stocks in their portfolios in the next 12 months. What is behind their interest?

The big commercial banks, regional banks, and asset managers have been a focus for our clients. Financial stocks are getting a boost from the expected shift to lower interest rates, and the robust capital-markets activity we have seen. IPO and secondary-offering activity have increased more than 20% this year. More activity bodes well for financial institutions.

Gold has been another focus for our families, even though it might not be how the investment strategy group thinks you should protect against inflation. [Twenty-four percent of families surveyed said they are buying gold as a haven.] U.S. equities are the best hedge against inflation. There is this stored-value concept around gold. Our Goldman Research Strategy team estimates 14% upside for gold, which has been on a tear. That has a lot to do with concerns about geopolitical tension. I don't expect that to change.

What private-equity investments are most popular with wealthy families?

Sports and secondary offerings are two big themes. The increase in interest in secondaries is dramatic. [Secondaries are private-equity holdings that have been sold into the secondary market by institutional investors.] We have had more muted primary-market dealmaking in the private-equity arena, so the secondary market has been an important place for liquidity. People can get in at what we consider interesting prices.

Buying secondaries is also a way to mitigate some of the J-curve risk associated with private equity [returns are initially low to negative before moving higher], because you are investing in more-mature companies. The secondary market is also a place for family offices to gain exposure to some incredible private companies that historically they wouldn't have access to.

The sports thesis is where investing meets passion. We see a localized approach: People want to buy teams in regions to which they feel connected. We have clients who bought baseball teams or football teams that they grew up watching. Sports investments also have a low correlation to other asset classes. Family offices are always looking for assets that have a low correlation.

Private credit is a rapidly growing asset class. Are your clients excited about it?

Even though allocations to private credit went from only 3% to 4% [in the survey], that is a significant change. If you have more companies waiting longer to go public, they need alternative sources of capital. Historically, it has been hard for U.S. families to invest in private credit because profits are taxed as ordinary income. But in a higher interest-rate environment, the net returns are more interesting. The category offers portfolio diversification, and higher yields than even the high-yield bond market. Direct lending has been a big theme in private credit. Some strategies still offer 8% to 9% dividends.

What are wealthy families thinking about cryptocurrency?

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