The Ultra-Rich Are Putting More Money Into Stocks. AI Giants Are Among Their Favorite Bets.

Some of the world's wealthiest families are allowing stocks to take up a bigger share of their portfolios, with enthusiasm for artificial intelligence coinciding with the largest quarterly shift toward public equities in several years.

Single-family offices held 37% of their portfolios in stocks during the second quarter, up from 34% in the first three months of the year. The Family Office Portfolio Tracker, powered by Addepar, uses aggregated and anonymized data from hundreds of family offices representing more than $1.4 trillion in assets.

Addepar CEO Eric Poirier said the shift suggested family offices were becoming more comfortable with a heavier weighting toward publicly traded stocks. He said the increase in public equities was the largest quarter-to-quarter allocation change the firm had seen in the past three to four years.

Family offices also reduced their cash holdings by less than one percentage point during the quarter, while allowing their increased exposure to stocks to remain rather than rebalancing portfolios back toward previous allocations.

Much of the increase in stock exposure resulted from rising market values rather than a large wave of direct purchases, as the S&P 500 gained about 15% during the second quarter. Poirier said family offices' decision to let those gains increase the weight of equities in their portfolios suggested they were comfortable maintaining greater exposure to publicly traded companies.

Artificial intelligence appears to be playing a substantial role in that positioning, with some of the world's biggest technology companies appearing across a large majority of the portfolios tracked. Microsoft was held by 77% of family offices, followed by Amazon and Alphabet at 76% each, Apple at 70% and Nvidia at 69%.

While public equities gained ground, family offices' allocation to alternative investments dropped to 46% from 49%, marking the category's largest decline in years. The change covered private companies, private equity, venture capital, private credit and real estate, although the decline was driven primarily by falling valuations rather than investors withdrawing large amounts of money.

Private credit accounted for some of the steepest markdowns, with 18% of funds launched in 2020 or later reporting reductions in net asset value, according to Addepar data cited by CNBC. That compared with an average markdown rate of 9% among private credit funds with vintages dating from 2016 or later during their first four years. Poirier said real estate and venture capital funds also experienced valuation reductions.

Despite those markdowns, private companies remained family offices' largest investment category outside publicly traded stocks, accounting for 15% of portfolios. Fixed-income holdings were unchanged at 8%, hedge funds remained at 7%, while other alternative assets, including commodities and collectibles, accounted for 6%.

The next quarterly portfolio data will arrive as wealthy investors contend with a changing interest-rate and bond-market environment. Poirier told CNBC that rates and fixed income would be among the main areas to watch in the third quarter, describing that part of the market as particularly dynamic.