The study of views in the family offices sector sheds light on the asset allocation and risk appetites of hundreds of family offices around the world.

A Citi Private Bank global survey of family offices around the world finds that they are putting cash to work by shifting to public equity, fixed income and private equity, indicating a greater tolerance for risk. 

The 2024 Global Family Office Survey Insights Report drew responses from 338 participants.

Public equities and fixed income saw their weightings rise from 22 per cent to 28 per cent and 16 per cent to 18 per cent, respectively. Private equity slipped from 22 per cent to 17 per cent. The bank suggested that this may have been affected by valuations taking longer to adjust upwards compared with those of public equities. 

North America received the highest overall weighted allocations (60 per cent) followed by Europe (16 per cent) and Asia-Pacific excluding China (12 per cent). Allocations to China had almost halved to 5 per cent from 8 per cent since last year due to the country’s ongoing economic challenges and market unease. North America’s share of allocations was up from 57 per cent, buoyed by a strong equity market.

The vast majority (97 per cent) of respondents expect positive returns for the next 12 months.

Among other findings, Citi Private Bank’s report showed that the future path of interest rates is the top concern followed by geopolitical issues – such as US-China relations and the conflict in the Middle East.

“As interest rates evolve and geopolitical challenges persist, ultra-high net worth investors and their families are putting cash to work and shifting their portfolios towards public and private equity,” Ida Liu, head of Citi Private Bank, said. 

Investment approaches are becoming more sophisticated with 60 per cent of family offices having built a chief investment officer-led team, along with investment committees and policy statements, as well as a strong commitment to alternative asset classes.

Such studies lift a lid also on the way that family offices and ultra-high net worth and HNW individuals and families deploy capital. The location of assets, for tax and regulatory reasons, is increasingly as important as the allocation of assets to particular areas, as shown here. Also, Citi Private Bank has explored these issues and the rise of "global families," in a new white paper; it gave an update in August on family offices' investment views here.

Artificial intelligence
Family offices are growing portfolio exposure to AI – which likely contributed to strong returns over the last year, the bank said. However, the adoption of this technology into family office operations is “lagging,” the report said.

As family offices professionalise, they are increasingly collaborating with external partners – investment management (54 per cent) and reporting (62 per cent) are the only two services provided internally by most family offices, with all others performed externally or jointly.

Inflation no longer top worry
For the first time since 2021, inflation was not respondents’ top near-term worry related to the economy and financial markets. Instead, the outlook for interest rates was top of mind for more than half of respondents, followed by US-China relations and market overvaluation. Concerns about the conflict in the Middle East are also more prominent now than those surrounding the Russia-Ukraine war.

For the year ahead, sentiment for the outlook for asset classes was more positive among respondents compared with last year’s survey findings, with the most confidence in direct private equity, private equity via funds and global developed equities.  

Value preservation was the main concern for families, followed closely by preparing the next generation to be responsible owners of their wealth.